How to Deliver Quality and Service in Your

Restaurant
When guests come to your restaurant, you should treat them as if they are friends visiting your home.
Treating your guests with care and providing an exceptional place for them to enjoy a meal is part of the
reason they will come back to your restaurant again.
Exceptional Quality
When customers come through your doors, they expect quality in every aspect of the restaurant. Guests
are looking for a value in the things they see, taste and touch, and so providing them with exceptional
quality will certainly leave a good taste in their mouths.
Food Quality
Food and beverages are probably the biggest indicator of quality that a customer notices. Food quality is
not only important to the customers' impressions of the overall restaurant experience, but it is important for
the their health, as well. Guests' health should never be compromised. Although not all restaurants can
boast the best quality food in town, they can still take measures to ensure that food is stored and prepared
safely. Take the following considerations when assuring food quality in your restaurant:

Be sure to follow proper first-in, first-out (FIFO) rotation with all food products.
Properly label and date all food products.
Never serve food that has expired.

Prepare products safely, avoiding cross-contamination with dangerous bacteria or cross-contact

with allergens.
Wash hands before and after handling food products.

Prepare and serve foods at proper, safe temperatures.

Quality Atmosphere

When guests enter your restaurant, they should feel as though they are in a special, comfortable place. Try
these suggestions to create a superior ambience in your restaurant:

Make deliberate choices with lighting. Consider your concept, and be sure the strength of the
light suits the tone you wish to portray to your guests.

Choose music carefully. Make sure the volume of your music is audible but not distracting.
Music should help create the ambience rather than overwhelm it.

Decorate appropriately. Decorate your restaurant with a special, unique theme or focal point.
Keep the restaurant spotless. Even a quick-service restaurant needs to demonstrate a high
standard of cleanliness for customers to feel good about the quality of food.

Maintain the temperature. Maintain a comfortable inside temperature in your building. 70F is
usually acceptable. Minimize drafts or hot spots from lights as much as possible.

Memorable Service
Perhaps even more important than food quality is the service the customers experience from the time they
enter the restaurant until the time they walk out the doors. Although restaurants thrive because of sales, the
sale should never be put before the customer's needs.

How to Speak with Customers

In any restaurant or food service environment, speaking to customers should always involve the utmost
respect and courtesy. This goes for all workers, from drive-thru attendants to servers at fine dining
establishments. This is rather idealistic. However, restaurant workers should follow these general guidelines
when speaking with customers

Use respectful titles, such as "sir" and "ma'am."

Be optimistic, and speak with a smile.
Never interrupt or talk over guests' conversations if you can help it.
Know your menu so you can speak intelligently to educate guests.

 Listen with respect and care to what the customer has to say.
Be sure you ask questions to clarify a customer's order if there is any confusion.
Be honest and straight-forward with customers at all times, especially if there is a problem.

How to Answer the Phone in a Busy Situation

When answering the telephone in a busy restaurant, never answer with "Thanks for calling, hold please," as
this immediately belittles the person on the other end.
1. If the phone rings while you are helping another guest, politely ask the guest to excuse you for a
moment, then answer the phone.
2. After greeting appropriately, let the person on the other line know you will be able to help them
momentarily.
3. Finish helping your current guest and come back to the phone within the next minute if possible.

How to Serve and Clear Food

Serving etiquette varies depending on the restaurant serving type. The restaurant types where this matters
the most are upscale or fine dining restaurants. Managers should train their servers in proper table etiquette
if they are unsure of how to proceed in a serving or clearing situation. The following tips describe the
basics:

Serve in the appropriate order. Service order is usually an important standard upheld in fine

dining restaurants or formal banquets. In these dining establishments, it is appropriate to serve

the guest of honor first, then the female guests and then the males. In less formal restaurants, it is
acceptable to simply serve women before men.
Serve and clear food from the left. Servers should serve and clear food from the diner's left
side. Some formal restaurants advise serving with the left hand for these tasks. Serving from the
left is best since most diners are right-handed. Politely excuse yourself if you find that you are
interrupting or reaching.
Serve and pour beverages from the right. Serve or pour beverages from the diner's right side
since that is usually where the glasses are set on the table.
Serve the correct order to each guest. When serving food, servers and food runners should not
call out entres to see who at the table claims the dishes. Servers and food runners should have a
system to identify which plates correspond to which guest without having to mimic an auction
house.
Never rush a party to finish. Good service extends beyond the meal to the entire length of time
the party is inside the restaurant.
Clear all plates at the same time. Unless otherwise requested, clear all plates and empty
glasses at the same time, and before presenting the check.

Speed of Service
Speed of service is an important phrase in most quick-service and fast-casual restaurants. These
restaurants capitalize on convenience and speed. They often have a speed of service goal built into their
policies. See the examples below:

A fast-casual pizza place might have a speed of service goal of 10 minutes from the moment the
order is taken to the moment the guest receives the pizza.

A smoothie shop or coffee house might have a more aggressive goal of three minutes, since
these drinks require less assembly and preparation.
Speed of service is integral to a positive dining experience no matter the restaurant service type. A guest
will likely form expectations as to how long they should wait for the food, depending on the restaurant. The
guest will be annoyed if his two-dollar cheeseburger took ten minutes to serve, but in a fine dining
restaurant, that guest will probably not get upset until he has waited half an hour or more for his entre.
Make it your goal to accommodate all guests with the same quality food within the same time frame at all
hours of the work day.

Caring for Upset Customers

Now and again there are bound to be problems. A customer may be dissatisfied with his meal or may find
the quality to be below his standards. Sometimes guests will find the need to vent anger or annoyance
before the problem can be resolved. Be sure to train servers the proper ways to handle customer
complaints. Retaining upset customers can be a challenge. When you put in the effort and respect to
recover distressed customers, you may be able to convince them to return to your establishment in the
future. Learn More

Customer Comment Cards

Customer comment cards are a great way of evaluating the customer experience. Customer comment
cards are typically set out on the table or delivered by the server at the end of the meal. Customers can rate
qualities of the restaurant, such as food presentation, menu pricing and server friendliness. Learn More

Caring for Upset Customers in the Restaurant

Even if all food service personnel do their best to please the customers that come through their doors, not
every customer will find satisfaction with the service offered. Guests usually have their reasons for
complaining, but it is up to the restaurant staff to rectify the problem and make a positive lasting impression.

Why Customers Complain

Occasionally, customers will find something that offends their taste and bring it up with the server or
manager. This is typically due to one of the following:

Slow service, Rude servers,,Inattentive servers,Incorrect orders, Dirty dishes,Dirty facility

Poor quality food and drinks
1. Listen and Acknowledge
When a customer has a problem, they tend to bring it up with the server, or an employee working in the
Front of the House (FOH) first. It is this employees job to listen attentively. He or she must find out, as
politely and compassionately as possible, what seems to be the problem. This employee should take the
time to hear out the issue completely before determining what can be done. Sometimes the customer just
wants to be heard, and having an employee acknowledge the issue is all it takes to settle the problem. In
other cases, however, it is helpful for a manager to get involved.
2. Apologize
The next step is for both the server and the manager to step in and apologize. Even if the offense was not
intentionaland it hardly ever isthe apology will set the guests mind at ease and help to dissipate the
negativity.
3. Rectify the Problem
From here, the server or manager must do what he or she can to fix the problem. The goal is to go above
and beyond the expectation so that the guests distaste is transformed into contentment. This can take
many forms, depending on the complaint.

The meal is remade and comped

The meal is replaced and comped
The guest is given a dessert on the house
A new server is assigned, if needed
A coupon for a free meal is given to the guest

It always helps to compensate, or comp the food in question. However, this is no substitute for top-notch
customer service. Even if a meal is compensated for a guest or a free meal coupon is given, it takes
sustained attentiveness, politeness and positivity to recover the customers trust.
4. Thank the Guest
Finally, it is important to thank the guest for giving you the opportunity to repair the problem. Training your
servers to always thank the customers simply for coming in will do wonders.
5. Correct the Situation

After all is mended, the manager should take the time to debrief the team tactfully, so as not to place blame.
Communicating the circumstances helps to assess the situation, preventing the same thing from happening
in the future

How to Develop a Restaurant Employee

Handbook
The employee handbook, or employee manual, is one of the most important documents your restaurant will
produce. It is one of the most effective ways of training your employees to do things correctly. The
handbook establishes the policies, procedures and other components that ought to be present in any
business. This article provides guidelines for creating an employee handbook for the first time, or assessing
and updating your old one. No matter how you make it, always consult with an employment lawyer or
restaurant human resource professional before finalizing and publishing your handbook.

Components of an Employee Handbook:

Disclaimer and Acknowledgement
Employment Policies
Work Hours and Payroll
Benefits
Appearance Standards
Behavior Expectations and Policies
Cash Handling Policies and Procedures
Operating Policies
Harassment Policy
Drug and Alcohol Policy
Health and Safety
Emergency Procedures
Company Property and Equipment
Why Your Restaurant Needs an Employee Handbook
There are several reasons why creating an employee manual is critical to your restaurant's success. This
document is home to your specific restaurant policies, local and federal laws, employment standards and
working procedures for all areas of the restaurant. Check below for specific ways the employee manual will
make your life easier.
Enhance professionalism.
The employee handbook shows your staff that you are serious about your restaurant, and more importantly,
their performance. You have taken time to create it and your staff needs to take serious time to read and
understand it.

Answer employee questions before they ask.

Many employees want to know what they need to do and how to do it. A good employee handbook will
cover this, so you will spend less time answering the same questions over and over.
Improve employee confidence.
Restaurant employees do better work when they are confident of their job requirements and the specific
procedures. This translates to better customer service as well.
Elevate level of consistency.
When you have the policies written out, you can consistently train every employee. Conversely, if you need
to take disciplinary action with someone, the employee handbook gives you written documentation of
procedures in case of any messy legal action.
Writing the Employee Handbook
Here are a few tips for writing the employee handbook that will make it as useful as possible for your
restaurant staff:

Write multilingual handbooks.

If necessary, make up employee handbooks in different languages to accommodate any non-native English
speakers on your restaurant staff.
Write so employees can understand.
No need to write the employee handbook in unfamiliar jargon or legal terms. Write simply and clearly so any
of your employees can understand it. After all, they are your main audience.
Produce specialized handbooks.
Depending on your restaurant, you may find that handbooks for every type of employee make the most
sense. In full service establishments, job descriptions can be very different and may require separate
policies and procedures. Limited or quick service restaurants often function just fine with one universal
employee handbook.
Add information as needed.
New situations come up, and you may need to make additions to your handbook in order to cover
procedures that you feel are important enough to be in the handbook. To avoid publishing new handbooks
every time this happens, print off the new procedures and hand out copies with the next round of employee
paychecks.
Essential Components of an Employee Handbook
All employee handbooks will look slightly different due to variances in concept, layout, service type,
location, hours and specific policies enforced by the owner or manager. Despite differences in content, the
following components are important in any restaurant employee handbook.

1. Disclaimer and Acknowledgement

The disclaimer and acknowledgement section of your restaurant's employee handbook establishes that
employees have read and understand the policies, procedures, expectations and benefits outlined in the
handbook. It also asserts that the handbook does not act as an employment contract. This is especially
important for states with "at-will" employment laws, which are laws delineating that an employment
relationship can be terminated at any time, by the employer or employee, without cause or liability.

2. Employment Policies
A section on hiring policies helps outline any state laws that apply to interviewing, hiring and otherwise
bringing people to work in the restaurant. An employee handbook needs to cover any applicable state or
federal employment law, including the commitment to Equal Opportunity Employment. Handbooks may also
include information on the following:

Recruiting
Interviewing
Applications
Background checking
Finding the right people Learn More

Termination
Include policies on dismissing employees from the restaurant. Be sure to cover both voluntary and
involuntary termination and what behaviors will lead directly to termination. Learn More

3. Work Hours and Payroll

In this section, discuss any labor laws that were not covered in the previous section, and to outline the
expectations and procedures for employees while on the job. Include the following concepts, tailored to
your restaurant:
Labor laws.
Labor laws differ from state to state. Include information about age requirements, work permits, overtime
pay procedures or information about what work employees can safely perform while on the job.
Learn More
Payroll.
Employees will want to know when and how they will be paid. Let employees know when paydays occur,
how they will receive their wages and if direct deposit is available. Learn More
Scheduling.
Discuss how the schedule will be created and how often. Include procedures for asking for time off, missing
a shift and otherwise changing the schedule. You may want to cover what happens when an employee
misses a shift without notice. This information will often require extra enforcement and communication in
person.
Learn More

Breaks.
Most state labor laws also include directives for employee breaks and meal periods. Employees must be
aware of their rights according to area labor laws. They should also be aware of how to clock out for a
break, where they can spend the break and how many breaks they are allowed in a given shift. Learn
More
Tip reporting.
This applies mainly to servers. Make sure the tip-reporting policy in your restaurant is clearly communicated
and enforced. Include instructions on how to fill out a tip reporting sheet and potential consequences for
inaccurate reporting. Learn More
Workers' compensation.
This section should have information on employee injuries or illness as a result of working at the restaurant.
Make employees aware of their rights and educate them about how to stay safe on the job.

4. Benefits
Employees want to know what benefits they are entitled to while employed at your restaurant. Make sure
they are aware of any of the following benefits your restaurant offers:

Employee meals.
Employee meals are a common benefit in many restaurants, in which restaurant employees receive one
free meal for each shift worked.
Learn More
Time off.
Businesses are typically required to provide time off to their employees when they are sick and during
holidays. Restaurants, however, may employ unique policies regarding time off. Be sure to clarify your
restaurant's policies, including the following circumstances if applicable:

Holidays
Sick Days
Vacation Time
Overtime
Bereavement
Maternity Leave
Jury Duty

Insurance and 401K.

Although a less common benefit, some restaurant managers and workers are eligible to receive medical,
dental and vision insurance as well as 401K packages. Learn More

5. Appearance Standards
Be sure to identify the proper uniform and appearance standards for every job position in your restaurant.
This includes the following:

Shoes
Uniforms
Hair
Facial hair
Nails
Jewelry
Tattoos
Piercings

Uniform requirements will differ in just about every establishment, so make it clear what your specific
standards are, including the following aspects of employee appearance: Learn More

6. Behavior Expectations and Policies

It is essential that a restaurant handbook define acceptable and inappropriate behaviors in the restaurant.
When employees know their expectations and their limits, there will be fewer problems in the workplace.
Learn More

Teamwork.
Emphasize teamwork in your employee handbook. Make sure that you foster an environment of trust and
cooperation as much as possible.
Customer service.
Depending on your restaurant layout and service style, you may have several different employees
interacting with customers for every order. Make certain that all employees are aware of your restaurant's
customer service goals and how to exemplify them.
Evaluations.
Let employees know that their performance will be periodically evaluated. These evaluations can even lead
to increases in wages, if your restaurant is in a position to offer this.
Rewards and discipline.
Establishing a rewards policy and a discipline system in the restaurant will help employees understand the
consequences of their behavior, whether good or bad. Identify unacceptable behaviors, as well as those
that result in immediate termination, such as harassment. In addition, clarify those behaviors that will make
the employees stand out as leaders. Learn More

Conflict resolution.
When employees show their superiors or their coworkers disrespect, the whole atmosphere of the
workplace can turn sour. Have behavior standards and resolution practices in place for conflicts that do
arise. Learn More

7. Cash Handling Policies and Procedures

Many restaurant employees will be handling cash while at work, either as a server, bartender or cashier.
Having cash handling policies in place will help instruct employees on the proper way to handle money to
minimize loss and maximize security and accuracy. Learn More

8. Operating Procedures
This section of the employee handbook includes any operational procedures that you feel are necessary to
communicate to your employees. This can include opening and closing procedures, proper ways of
operating equipment or supplies, special safety procedures and service guidelines. Generally, the more
details you provide in this section, the better.

9. Harassment Policy
Have a stringent policy on workplace harassment. Provide information about sexual harassment and other
forms of workplace harassment, as well as instruction for how to avoid it, how to identify it and how to report
it. You may even want to include a statement of acknowledgement for every employee to sign, stating that
they have read and understand the no-harassment policy. These can be kept in employee files. Learn
More

10. Drug and Alcohol Policy

Drug and alcohol abuse can occur in any restaurant. Not only is it harmful to the employee, but it can be
dangerous to those around him or her. Be sure your policies are clearly defined. This especially applies to
restaurants that serve alcohol and allow employees to drink after their shifts have ended.

11. Health and Safety

Keeping your restaurant staff safe on the job should your highest priority. Be sure to provide consistent,
thorough training to all employees through regular staff safety meetings and on-the-job coaching. Have
proper labels and posters in place to remind employees of hazardous chemicals or potentially dangerous
procedures. Also check out the Health and Safety Section of the FoodServiceWarehouse.com Education
Center for more information.

12. Emergency Procedures

In the event of an extreme weather emergency, power outage or burglary, your restaurant staff needs to be
prepared with the proper precautions and procedures. Educate your staff about the importance of
awareness and security when it comes to crisis situations. Learn More

13. Company Property and Equipment

Some restaurant employees have access to computers, vehicles or other equipment belonging to the
restaurant. Make sure employees are aware that they need to respect restaurant property of all types.

Fundamental Up selling Strategies for the Restaurant

Up selling is essentially a practice of embellished suggestions aimed at getting the guest to spend more
money. It is a valuable marketing strategy in any restaurant, but it must be trained and practiced in order to
be effective as a sales technique. Restaurant servers, cashiers and kitchen staff who have contact with the
customer should know appropriate and effective ways to up sell menu items. These useful methods for up
selling in the restaurant will help increase sales and tip money.

How to up sell
Up selling is the art of enticing customers to buy something extra without them knowing you are selling
something.

Offer Multiple Suggestions

Workers can up sell whether they work in a quick-service restaurant or a swanky lounge. Here are
two prime examples:

At Wendy's, the worker at the cash register will usually ask the customer if he would like to "Biggie
size" his order. This means getting a bigger drink and bigger order of fries for a few extra cents.
The customer often feels as though he is getting more bang for his buck, even though he probably
did not want the bigger size to begin with.
A guest asks the bartender for a vodka martini. Rather than simply taking the order, the bartender
asks, "Which type of vodka would you prefer? We offer Grey Goose and Sky vodka." The
bartender brings up two of the most expensive varieties of vodka in order to up sell to the guest,
or get him to pay more for his martini.

Use Embellished Descriptions

Servers and restaurant workers can up sell by describing the ingredients, cooking process or
presentation of a dish as a means to entice customers and convince them to buy. Often, servers will
not actually ask a question but simply launch into descriptions to whet their guests' subconscious
appetites. Make the items sound exciting by trying the following methods:

Suggest an appetizer by explaining the ingredients and preparation with vidid language. For
instance, say "You will find our appetizers especially intriguing, including the broiled goat-cheese
quesadillas which are sprinkled with pepper and thyme and served piping hot."
If a diner is already sure of what he wants, ask him if we would consider any sides to go with his
meal. To a diner ordering chips and salsa, a server might say, "A side of our fabulous guacamole
would complement your chips and salsa, since it is prepared with fresh avocados and tomatoes,
as well as our signature spices." Describing the side as a smart attachment to the meal is a great
way to make the meal seem incomplete without the extra purchase.
Five Keys for Up selling Dessert Items
Wine Pairing

Wine can provide an excellent complement to a meal. Hence, wine pairing is a great way to up sell to your
customers. However, satisfying the customer's palate with a well-paired wine requires training, experience
and extensive knowledge of both the food and wine menus. Taking the time to learn about food and wine
pairings can improve the customers dining experience and make even more sales for the restaurant.
Desserts in particular are lucrative but challenging items to up sell. The guest is often satisfied from the
main entre and may not ask for dessert directly. Listed below are five popular strategies for up selling
desserts:
1.
2.
3.
4.
5.

Present dessert menus after lunch or dinner. Bring out dessert menus for each diner after
clearing dinner plates. Seeing the descriptions and ordering from a menu may make the guests
feel more in control of their choices.
Use vivid descriptions. Describe a few of the dessert specials using vivid imagery to appeal to
the guests.
Bring out the dessert tray. Utilize a dessert tray to show guests how tasty the desserts look.
Offer low-calorie options. Do not forget to offer low calorie dessert options, which may sway
diners who are trying to watch their figures. Also suggest coffee or tea.
Show off your desserts. When someone does order a dessert item, be sure servers or runners
carry it at table level. This way, other diners can see and smell the dessert and may be convinced
to order one of their own.

How to Integrate Up selling Strategies into Training Sessions

Up selling does not always come naturally. Make up selling part of the training regimen by offering tips and
suggestions to restaurant workers and servers at the start of every shift, as well as during initial training
sessions. Managers and lead servers can help their staff learn to up sell by following these suggestions:

Allow servers to taste menu items. Provide opportunities for servers to taste menu items,
including daily specials.

Train in menu knowledge. Make menu knowledge a priority, so servers can speak intelligently
about the preparation and quality of food.

Suggest vivid descriptions. Offer ideas for how to use colorful language when describing
dishes. For example, avoid simply offering "a slice of chocolate pie" and instead up sell "an
exquisite slice of delicate chocolate mousse pie with a drizzle of caramel." The second description
makes a big difference.
Role-play with servers. Role-play with servers to demonstrate how to ask questions or offer
more items
Provide rewards. Hold contests and offer incentives for servers who sell the most dessert or daily
special, giving food or gift cards as prizes.

Breaking the Language Barrier: Training and

Managing a Multilingual Restaurant Staff
Approximately one third of workers in the quick service restaurant industry are non-native English
speakers.1 With an increasing population of multilingual food service workers, the importance of
communication and management styles geared toward non-native speakers is paramount to a smooth
operation. Consider these guidelines to create a culture of acceptance and make the most of your nonnative speakers skills and talents.
Tools for Employees
When working with non-native English speakers, or even those who barely speak English at all, it helps to
have materials translated into the appropriate languages so these employees can learn the job as well as a
native English speaker.
Multilingual training materials.
Bilingual or multilingual tools like booklets, quick-reference cards, employee manuals and menus are
helpful when training someone new.
Multilingual POS system. Many operators overlook simple business components like the Point of Sale
(POS) system. Instructions for clocking in and clocking out should be in English, Spanish and any other
language frequently spoken in the restaurant.
Audio or video tapes for employees.
Some restaurant chains will provide audio or video tapes to employees to help bridge the language gap. 2
The tapes include important words and phrases to help non-native speakers with typical English restaurant
terminology.
ESL classes.
On occasion, a restaurant or company will offer education as part of the benefit package. This allows
employees the means to study English as a second language on a deeper level, improving confidence and
skills in the restaurant or any other workplace.
Visual tools.
These can include posters that outline the proper step-by-step procedures for cleaning an area or colorcoded bilingual labels to identify chemicals.

Tips for Management

Although non-native English speakers and other bilingual employees often need extra training, some real
benefit comes from managers who take the time and make the effort to incorporate an understanding of
other languages and cultures into the workplace.
Training materials.
Many chain restaurants or large companies offer training classes for managers to learn enough of a
language to communicate with their non-English speaking employees. Even a few functional words help
communication as a whole, especially between kitchen managers and kitchen workers in a busy restaurant.
Learning the culture. Managers who learn about their employees cultures as well as their languages will
often be better able to accommodate any differences in communication styles. For example, some
communication difference that vary by culture may include:

Volume of speaking voice

How close one stands to another while holding a conversation
If people look directly at one another while speaking3
Opportunities for advancement.
Improvement in English can be perceived as excelling in the job itself, and any significant improvement in
the workplace should be rewarded with a promotion both in job responsibility and pay rate.

Appreciate diversity in the workplace.

Bilingual and multilingual skills are often an important addition to the workplace. Many people go out to eat,
and it helps when you can provide exceptional service to all of your guests, especially non-native English
speakers in the area. Some restaurants look specifically for qualified job candidates who are able to speak
a language other than English to help drive business in a multi-cultural area.

Diversity Efforts
Although linguistic and cultural differences can form a barrier, diversity can enhance the workplace
environment in many ways. In 2002, Nation's Restaurant News and the Multicultural Foodservice &
Hospitality Alliance jointly delivered a Diversity Study. Of about 150 responses from companies within the
food service industry, almost 40 percent responded that they have programs in place to hire and retain
qualified non-native English speaking workers.4 These programs include the following:

Management succession plans

English language classes
Support networks
Initiatives like these help promote diversity. They capitalize on the skills and talents of people who often fall
under the radar because of a language barrier. On the whole, diversity can be a positive concept for a
restaurant. Diversity in the workplace shows and encourages cultural acceptance both for employees and
guests.

Basic Restaurant Accounting

The key to any successful business is simple: profits. Restaurant businesses need to make money to
survive, and in order to make money, restaurant owners, operators and managers need to know basic
restaurant accounting systems to control cash flow, reduce losses and maximize their profits. Keeping track
of your finances will put you in a good place to monitor your cash flow and make the most of your business
in the long run.
Cash Flow Management
Managing cash flow means tracking all the cash that is coming in and leaving your restaurant. With sales
and expenses always playing a balancing act, estimating future cash flow can be a guessing game until you
get the feel for your restaurant's business patterns, or when the money comes in versus when it goes out.
Essentially, restaurants strive for more income than expenses. When a restaurant is able to bring in more
money than it spends, it maximizes its net income, and the overall profits grow. Learn More
Keeping Record
Recording your cash flow, including income and expenses, is critical to your restaurant's accounting
procedures. Your income includes all cash, credit card and check sales received. Outgoing expenses
should be recorded with the help of receipts and invoices. Your Point of Sale (POS) system typically keeps
track of all credit card and cash sales, and all receipts should be filed and recorded in a Profit and Loss
document (P&L). It is also essential to keep a close eye on your inventory counts.
Taking Inventory
Your restaurant's inventory includes the supplies, products and ingredients you have on hand to prepare
and serve food and beverages. Inventory is an important factor in managing restaurant accounting,
because it represents an investment in food and supplies that are needed to make a profit. You should
always consider your inventory as cash in a different form, and count it consistently and thoroughly. Learn
More
Profit and Loss Statement (P&L)
A restaurant's profit and loss statement, or P&L, is much like an income statement for the restaurant. This
document serves as a report to summarize income, expenses and inventory, illustrating a restaurant's total
profits and losses over a period of time. It is best to prepare a P&L each week if possible. This makes it
easier to track numbers and comparing reports from month to month and even year to year.1 A P&L

statement includes information relevant to your cash flow, including sales and labor expenses. Learn
More
Accounting Software
Although large chain restaurants may have an in-house staff of accountants available to do the leg-work,
many restaurants use computer programs to help record their financial information. The best software
includes a Point of Sale (POS) system, financial software, and the software to integrate the two. Fullyintegrated systems like these can take the burden off operators and help them fully analyze their financials
by running comprehensive reports. Learn More

The Restaurant Profit and Loss (P&L)

Statement
A restaurant's profit and loss statement, or P&L, is much like an income statement for the restaurant. This
document serves as a report to summarize income, expenses and inventory, illustrating a restaurant's total
profits and losses over a period of time. Most P&L statements involve two major sections:
1.

2.

The section first specifies any sources of revenue, including food, beverage sales, merchandise
sales, catering, and any other source of income important to the restaurant. This section also
includes the usage cost associated with the sales, known as the Cost of Goods Sold (COGS).
Learn More
The other section involves all operating expenses in the restaurant. This includes payroll, rent,
utilities, and repairs, among others

The difference between the revenue and the expenses determines whether the restaurant reaps a profit or
suffers a loss at the end of a given period.
Restaurant Revenue
All sales income is recorded on the P&L statement. There are usually separate lines on the statement for
the different sources of income, including the following common sources of restaurant revenue:
Food and beverage sales
The most obvious means of income in your restaurant is food and beverage sales, since this is the reason
most people come to your restaurant in the first place. Food sales will likely be your major source of
income. However, this depends on your restaurant concept. If you run a juice bar, juice will constitute most
of your sales.
Merchandise
Merchandise is another method of boosting profits. Merchandise includes souvenirs, gifts and other retail
items unique to your establishment that can increase sales, especially from tourists or holiday shoppers.
Merchandise includes the following:

Gift certificates or gift cards

Cookbooks
T-shirts
Hats
Mugs
Prepackaged food or beverages

Catering
Another method of creating income is by catering, or engaging in other off-site selling opportunities.
Catering parties and events for customers is a great way to increase daily sales and reach out to people
who have never tried your restaurant. Limited service restaurants can offer a catered lunch option for
surrounding businesses. Smoothie shops can sell smoothies at local high schools and sporting events. It
pays to learn about your surrounding area and how you can take your sales outside your restaurant's walls.
Restaurant Expenses
There are many expenses involved in operating a restaurant. Restaurant owners or operators can include
whatever expenses they like on their P&L, as long as it helps them to stay organized and aware of the costs
they face. The following are commonly included on restaurant P&L statements:

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS), also known as Cost of Goods Used or simply usage, is the cost of the
products, or goods, that your restaurant sells. Essentially, this is the money spent on inventory. This is
usually denoted just below total sales on the P&L report. To control usage and make the biggest profit, the
restaurant must purchase enough products to serve your customers without running out and without having
too much left over going bad on the shelves. Learn More
Payroll
Also called labor cost, this is one of the most important expenses in your restaurant. Part of your business's
income must go to salaries and hourly wages in order to provide paychecks for your employees. This is
considered a controllable cost, however, since the manager can determine how many hourly employees to
schedule, and can manipulate the number of people on a shift at any time. The trick is to balance labor in
order to provide great customer service without scheduling more workers than you need.
Learn More
Operating Expenses
There are several daily expenses incurred while running the restaurant, such as purchasing or replacing
china, flatware or glassware, as well as any linens or paper products that may need to be cleaned or
replenished. These can be lumped into operational expenses on your P&L.
Occupancy Costs
Known as occupancy costs, rent or mortgage, property taxes, water and sewer taxes, gas and electric,
insurance, and repairs all fall under the restaurant owner's responsibility. These are typically known as fixed
expenses since restaurant owners usually have to pay a steady amount on these costs every month.
When to Prepare a P&L Report
It is best to prepare a P&L each week if possible. This makes it easier to track numbers and compare
reports from month to month and even year to year.1 The main reason for the P&L report is simply to track
these profits and expenses to see how well your business is doing. When you know the numbers and
trends, you know what changes you can make to improve your business profits.
Sample P&L Statement
The categories listed on the P&L, including all the line items in each category, are dependent on the
information the owner needs or wants to analyze. P&L statements will look different for each restaurant,
depending on the type of food product, the required occupancy expenses, and the operations costs unique
to the establishment. Look below for a sample restaurant P&L:

Download a sample Profit Loss Statement (xls)

Restaurant Cost of Goods Sold (COGS) Made

Simple
Cost of Goods Sold (COGS), also known as "cost of goods used" or simply "cost of usage," is the cost to
your restaurant of the food and beverage products your restaurant sells. Since your goods pertain to your
food and beverage inventory, COGS is determined with the following equation:

The beginning inventory means the amount of product that you have in your kitchen and storage rooms at
the beginning of a period, usually the beginning of the week. For instance, if Monday is the start of your
business week, and you have $5,000 worth of food and beverages on your shelves, $5,000 is your
beginning inventory.

Purchases means the amount of inventory you purchase in food and beverage orders in that period of
time. If an order of another $3,000 worth of inventory arrives on Friday, this would be considered the
purchase.

Ending inventory, then, is the amount of food product you have left when the work week is over. Although
you purchased product during the week, but you will have less inventory at the end of the week since you
sold the food to your customers. For example, at the end of the work week, you have $4,000 worth of
inventory remaining.

For example, if your restaurant has $5,000 worth of inventory on hand on Monday, and then purchases
another $3,000 of food and beverage product, you have a total of $8,000 worth of inventory at the
beginning of the week. The following Monday morning, you arrive at the restaurant and count $4,000 worth
of inventory. This gives you a usage cost, or COGS, of $4,000. This means that you sold $4,000 worth of
inventory. The equation looks like this:

Adding Transfers to the Numbers

To be even more accurate, you can use the equation below:

"Transfers out" include any products that you send out of the restaurant to another area in your restaurant
(such as from the bar to the kitchen) or to another restaurant altogether (often another restaurant in the
same chain). Thus, "transfers in" are products that you transfer from another restaurant to your own. If you
have no transfers in or out, simply leave these parts of the equation at zero value. It is important that any
transfers are recorded because any items coming in or leaving your kitchen will affect your inventory count.

Referring back to our example from above, imagine the following scenario: due to the unanticipated
celebrity of your weekend special, chicken with exotic fig sauce, your restaurant is about to run out of exotic
figs. Since you are a chain restaurant, you are able to phone another location and ask if you might be able
to use some of their exotic figs. It happens that the other location has excess inventory of figs and can
transfer one box of figs to your restaurant. You drive over the following morning to pick them up. One box of
exotic figs costs $85.00. Keeping with the same numbers as above, your COGS equation would look like
this:

The other restaurant operators would do the opposite; that is, remove $85.00 worth of inventory from their
kitchen and subtract it from their beginning inventory numbers.
Food Cost Percentage
One of the most important numbers restaurant managers and owners look at is food cost percentage. In
food service, this percentage represents the portion of sales spent on food. Since you reap sales from the
inventory you use, you can determine the food cost percentage by money you spent on food sales (COGS)
by your total food sales. The following equation may help clarify the process:

Using the original example, one would determine the food cost by taking the COGS dollar amount and
dividing it by the total sales for the week. So, let's say the sales for the week were $12,750. Your new
equation would look like this:

In this case, about 31% of sales were spent on food and supplies. This is a fairly typical food cost for a
restaurant.

Categorize the Cost

It is very helpful to break down your food cost into all the types of foods and beverages your purchase. For
instance, a 31% food cost may be broken down into the following food categories:

If food cost is high, categorizing like this will help determine where the money is being over-spent.
Operators can keep a much better tab on food cost when they know exactly what percentage of the total
cost they are spending on each category of food.
Determining Gross Profit
The COGS equations are essential for figuring the restaurant's gross profit:

Gross profit is calculated by deducting money you spend on food and beverages from your total revenue.
Using the ongoing example, you would subtract your COGS ($4,000), from your total sales ($12,750) in
order to find your gross profit. The example looks like this:

Although gross profits may be included in your Profit and Loss (P&L) statement, the important number to
look for is the net profit. Net profit, or actual profit, is the gross profit minus all operating costs such as labor,
rent, repairs, and marketing costs, to name a few. This is your restaurant's true profit after all is said and
done. Learn More
Making profits is the restaurant's number one goal. In order to do this, the manager needs to
simultaneously bring in revenue and control costs in the restaurant. This is one of the biggest challenges,
but also one of the manager's most important responsibilities. Maintain a steady, profitable food cost by
adhering to all recipes, assessing purchasing procedures and properly conducting inventory in your
restaurant.

Basic Tips for Creating and Using an Annual

Budget in Your Restaurant
Creating an annual budget involves estimating about how much money you will spend in different areas of
your restaurant. For instance, you know there will be expenses associated with running the business, but it
will help you enormously if you can anticipate those expenses and stay within a financial plan from one
month to another. An annual budget gives you goals to reach and limits to beat. The budget is also
essential to plan for the restaurant's future spending. Here are a few tips for creating a budget that works for
your restaurant.

Plan by Month or Period

Most restaurants use a system of 12-month or 13 four-week periods to track their annual budget. By
breaking the budget down into these types of sections, it is easier to see when money is moving in and out
of the restaurant.

Determine Your Projected Sales

Ascertaining your projected sales, also known as a sales forecast, helps you figure out how much your
restaurant will make in sales during a given period. There are many ways to determine your restaurant's
projected sales. It comes down to making an educated estimate about the customer traffic and resulting
sales your restaurant generates.

Anticipate Your Costs

In the restaurant, budgeting is often a game of balancing costs and income. In fact, a budget is much like a
profit and loss (P&L) statement extended over a longer period of time. Be prepared to account for the
following costs in your annual budget:

Rent or mortgage payments

Taxes
Insurance
Labor/payroll
Utilities
Loan payments
Operational supplies
Repairs and maintenance
Marketing
Training

Food service professionals suggest that you plan to spend about 30 percent of your budget on food, 25
percent on labor, 10 percent on rent or mortgage, and 3 percent on utilities. 1 The rest goes in small parts to
operational expenses, marketing, taxes, maintenance and other variable costs. These are simply estimated
guidelines to follow, as every restaurant's expenses and budget are different. Look below for a graphical
representation of these suggested expenditures:

Know Your Breakeven Point

The breakeven point is the volume of sales needed to cover all expenses without making a profit. It is the
bare minimum amount of sales the restaurant operation needs to bring in to survive. It is important to know
your restaurants breakeven point so that future financial decisions can be made in hopes of making a
reasonable profit.

Analyze Your Financials Every Period

Examining your P&L and your budget on a weekly and monthly basis will help you keep your bases covered
in terms of realizing your expenses and income. Evaluate your budgeted operating expenses and your
actual expenses, as well as the net profit you anticipated and what your restaurant actually made. Make a
note of any areas in which your expenses exceeded your budgeted amount.

When budgeting for the year, especially if you are doing so for the first time, it helps to have a budget
worksheet. Download a sample budget worksheet (xls) to your own back office computer.

How to Price Menu Items in the Restaurant

Books on restaurant management will tell you that pricing your restaurant menu items is somewhat of a
vague process. You can figure out how much you are paying for food supplies and simply charge three
times as much. You can try to out-do your competition by lowering your prices, or you can guess and hope
your customers will pay the prices you apply.
The options above, although not unheard of, probably incur too much risk. After all, your menu, pricing
included, is one of the main reasons your customers come through your doors. They want a quality product
and they want to pay your operation accordingly. Your prices will influence how your restaurant is perceived
by the public. Prices directly affect your restaurant's profitability, so it is important to spend the time required
to get it as close to perfect as possible. Although there is no exact formula, the guidelines in this article will
help demystify the process so you can gain the most benefit from your decisions.
Things to Consider Before Pricing
There are a variety of aspects that affect restaurant menu pricing methods. Consider the following
influencing factors and how they affect your restaurant before you begin pricing or changing menu prices.
Direct costs. These are the ingredient costs associated with the food item itself. This also involves the food
cost, how you portion the servings, and how much is spilled, overcooked, thrown away or otherwise wasted
during the preparation process.
Indirect costs. Indirect costs are those that do not include the actual ingredients that make up a dish, but
the aspects of your restaurant that add perceived value or quality. These provide significant basis upon
which to charge higher prices.

Preparation and labor. The labor to prepare a menu item is considered an indirect cost. Menu
items that require time, effort, artistry or talent to prepare merit a higher menu price than
something that simply requires heating and plating.
Overhead expenses. Overhead costs for items such as dcor, product presentation, amenities
and marketing efforts. Although slightly less common, these can create added value and validate
higher menu item prices.
Volatile food costs. Many raw commodity food items, or basic ingredients with minimal quality variance,
may fluctuate as often as daily. For instance, flooding in Texas could wipe out a tomato crop, causing supply
to drop and demand to increase. You may want to set your menu prices slightly higher for items that tend to
swing in price, especially for when food costs increase unexpectedly. This way, you will avoid losing money
even when paying slightly more for those products.
Competition. Check out your competition on a regular basis. You might even go out to eat at your rival
restaurants and take advantage of the opportunity to see what you can improve about your own operation.
Service type. Prices will undoubtedly change depending on whether your restaurant is a fast-casual
restaurant or a fine dining restaurant. Be sure your prices represent the service value your customers
receive. For instance, full service restaurants can always charge more for their hamburgers than quickservice joints, because full service restaurants are also providing greater ambience, better service and often
better ingredients than the quick-service alternative.
Pricing boundaries. Determine your boundaries. Every restaurant situation is different and prices will vary
depending on location, preparation and simple supply and demand. Figure out the very least you can
charge while still making a reasonable profit in your business, and then determine the highest price your
market will pay for your items. Gather information about demographics and average income levels in order
to find out the prices people in your market area will pay.
Common Menu Pricing Methods

Your restaurant concept, that is, the type of food, service and ambience has a lot to do with the different
challenges a restaurant owner might face when pricing menu items. There are other methods of pricing
menu items, but below are some common suggestions for how some restaurant owners choose to proceed:
Ideal Food Cost Pricing Method
This method calls for an owner to consider the actual cost of a menu item, then consider his or her ideal
food cost percentage. Ideal food cost percentage varies, but typically lies somewhere between 25 and 30
percent. The two are divided and voila, you have a menu item price. See the example below:

Using the ideal food costing method method, the chicken entre should be priced at $14.16. To use this
method, you need to know the cost of all the ingredients in the recipe for Lemon Rosemary Chicken, from
the half cup of lemon juice to the pinch of fresh rosemary to the chicken itself. You also need to account for
any side items that come with the entre, and factor that into the menu price as well. Every food item on the
plate matters. Since $14.16 is not a typical menu item price, you may want to lower it to $13.99; that is, if
you cannot think of an inexpensive way to increase the perceived value of the plate enough to raise the
price from $14.16 to $14.50.

Did You Know?

Items like fryer oil, salt and pepper and condiments can affect your overall food cost. You should account for
a variance of about 4% to keep from losing money on these indirect costs. For instance, if you are shooting
for a food cost percentage of 32 percent, you should actually try to hit 28 percent to account for those extra
costs.1 Learn More
However, since factors like indirect costs, price volatility and competition are important to consider, this may
not be the most reliable pricing method. Applying a price markup to all items in one fell swoop like this may
inaccurately and unreasonably over- or under-price some of your items. And finally, it is always important to
pay attention to the market and see what the customers in your area are willing to pay.
Competition Pricing Method
The restaurant owner using this method assigns prices to items based on the general market price or the
prices assigned by the competition. Usually, the owner will either price the item to be the same as the
competing prices, price it slightly lower to get those looking for a bargain, or price it higher to attract those
looking for higher quality. This means that a restaurant has to work within a certain price, including labor
and preparation, potentially putting a strain on the chef.
Beware of Price Gouging
Food service operations in ballparks or stadiums tend to charge people more for their food and goods,
since guests do not have the option to leave and get food somewhere else. However, some places take this
too far by charging more than what is considered reasonable. Be careful of those upper limits and be fair to
your customers.
For instance, if the owner prices the Lemon Rosemary Chicken at $14.00 because that is just under the
current competition's prices, and the ideal food cost percentage is 30 percent, the chef needs to make sure
the kitchen is producing this item at no more than $4.20. This can be complicated.
Demand-Driven Pricing Method
This concept is based on the economics of supply and demand. For instance, restaurants in airports or
concession stands at sports stadiums can get away with charging more for their food items because it is the
only source of food in the vicinity. The demand for food is greater than the supply, so people are willing to
pay more for it. Restaurants that offer specialty menu items or a unique and exciting ambience can get
away with charging more since it reflects both the food and the experience.
Study your market and your customer base before pricing your menu items. You will most likely know what
prices are simply too high, and the last thing you want to do is drive your customers away. Make your prices
competitive and reasonable, and make sure you are offering the value appropriate for higher cost items.

Evaluate Current Profitability

When you know which menu items are the highest grossing items (meaning they result in the most profit
before any other expenses are considered) then you know which items to promote. In the chart below, you
can see by looking at the last column that the king crab legs are the most profitable item on this seafood
menu. Even though the food cost is greater for the crab legs, the gross profit is higher as well. To many
operators, it is the gross profit that matters most. To maximize your profit, you might consider raising the
price of the other fish entres slightly, or simply train your serving team to upsell the crab legs.

Fish

Food Cost

Selling Price

Food Cost %

Gross Profit

Halibut

$2.75

$12.79

21.50%

$10.04

King Crab Legs

$7.50

$20.79

36.40%

$13.29

Salmon

$6.42

$18.99

35.60%

$11.57

Increasing Profitability
Raising menu prices is a delicate issue. Many restaurant owners are unsure how to handle it because of
how it might negatively affect their consumers' perception of the restaurant. Try the following suggestions to
increase your restaurant's profitability:

Promote your value. Marketing your brand and your best products can communicate your value to
potential customers. Use coupons, advertisements, and other marketing strategies to start making more
money.
Make your profitable items stand out. Filler items are those that take up space on your menu pages but
do not offer much in the way of gross profitability. Make sure you make your highest grossing items stand
out on the menu.
Add appeal to basic menu items. You can make your menu items more flexible and add value by creating
a more attractive name, an intriguing sauce or dressing or a special theme to the food. For instance, taking
a normal hamburger and drizzling it in a spicy honey barbeque sauce might add a little pizzazz and appeal,
giving the public more incentive to try it and the owner a reason to slightly increase the price.
Change prices in small increments. Small increments are less noticeable when you need to increase
prices, and small amounts of revenue can add up to a large gain in profit. Additionally, items ending in odd
numbers such as .95 or .99 are less off-putting than whole numbers. 2
Use specials to fuel guest interest. Full-service restaurants are able to create occasional specials that
guests can order off the menu. Although specials can be created from the food you already have in your
inventory, they should not be concocted from week-old leftovers. Menu specials are a great way to create
new, exciting menu items to entice your customers. If the special goes over well, you can certainly consider
adding it to your menu to start making a consistent profit from it.

Top Ten Tips for Controlling Food Cost in the

Restaurant
Food cost is one of the highest costs in the restaurant. In order to keep food cost percentage, also known
as Cost of Goods Sold (COGS) at a manageable rate, follow these tips:
1. Keep an eye on your profits and losses (P&L).
When you know what profits you are bringing in as well as the fixed expenses affecting your business, you
can better evaluate your options and see where you can cut costs. Learn More
2. Conduct inventory consistently.
Regular and thorough inventory counts will help you stay in control of your usage and the costs associated.
This is especially important for high-cost items such as meat and liquor. Learn More
3. Price menu items properly.
When you price your menu items reasonably, your customers will continue to pay you and you will make a
profit on your products. Learn More
4. Portion food correctly.
Be sure to serve food in portions that will not over- or under-fill plates. When customers are finished eating,
look at the plates as they come back to the kitchen. If there is a lot left on the plate, or you are consistently
wrapping up take-home containers, you may be over-portioning your meals.
5. Handle food properly.
Enforce first-in, first-out (FIFO) rotation for all perishable foods. Keep foods at proper temperatures and
cook all foods correctly to avoid waste and prevent contamination. Learn More
6. Rethink the garnish.
Garnishes often consist of fancy fruits or layers of fresh lettuce which add visual appeal but are rarely
eaten. Use less expensive food items or remove garnishes entirely to save on food costs.
7. Keep a record of all food waste.
Use a waste chart to write down any foods that are made incorrectly, thrown away or spilled. Failing to
record this "usage" will skew inventory reports and throw off your food cost percentage.
8. Be consistent with food purchases.
Consistency with food purchases comes with time but can help you to anticipate expenses from week to
week and keep your food costs steady. Learn More
9. Create a rapport with suppliers.
Once you are in business a while, your suppliers will get to know your regular food orders and you will
become familiar with the cost of your purchased goods. Be sure you stay in communication with your
suppliers in case of any problems with food quality or any issues with food prices. Learn More
10. Train employees to care.
When your employees see how your inventory represents potential profitsas well as their paychecks
they are more apt to stay aware of waste, portioning and overall food quality.

How to Control Labor Costs in the Restaurant

Operating a restaurant involves many expenses. Essentially, you incur labor costs when you have
employees working for you. Labor is an operational expense in just about any restaurant, predominantly
including hourly wages for staff members.
Labor Cost Awareness
Labor costs are typically understood as a percentage of sales. To figure your labor cost, use this equation:

Many restaurants hope to run a labor percentage below approximately 20 percent. When the costs begin to
climb, anxiety levels rise as well. Still, simply paying your employees less will not solve labor cost issues.
The keys to controlling labor costs are improving workplace productivity and scheduling your employees
wisely.
Control Your Labor Costs with Improved Worker Productivity
Increasing productivity improves your overall operation by building employee skills and confidence. Take
time to provide your staff with sufficient training and communication.
Cross-Train Your Staff
Cross-training is beneficial to both the employee and the business, since the worker will have a wider range
of skills and be able to help in multiple areas of the restaurant. This allows the manager to schedule fewer
workers while still being able to achieve the same production and service standards. Some suggestions for
cross-training include:

Train your prep cook to handle the grill

Train your hostesses to work as back-up servers
Train bussers to help run food to customers
Conduct Frequent Staff Audits and Reviews
Another great way to help improve productivity is to perform regular audits. Take the time to watch and
assess your employees performances. If you find that a large portion of your employees work days
includes inordinately long breaks or downtime, it might be wise to revise your schedule. Conducting face-toface reviews with each member of the staff will help communicate your thoughts and concerns.
Control Labor Cost With Precise Scheduling
Make sure you have constructed a budget to help keep track of your annual sales and expenses like labor.
Through your budget, allow a percentage of your sales to cover labor expenses. Then, create a staffing
schedule to reflect your budgeted allowance for labor expenses. The following tips elaborate these
guidelines:
Break down your annual budget. Break down your annual budget into monthly budgets to help divide the
money into weekly sections. This will give you a weekly budget, from which you can determine labor costs
and make an appropriate staffing schedule.

Design a new weekly schedule for all employees. Relying on a fixed schedule week after week fails to
acknowledge shifts in projected sales, changes in the weather or other factors that can affect your
business. Adjust the number of staff scheduled each week to keep compliant with weekly budget
constraints.
Learn more
Monitor clock in/clock out times. After every shift, make sure that all employees have punched in and
punched out exactly according to the schedule. Managers can usually use tools within the Point of Sale
(POS) system to monitor and alter this information when necessary.
Discuss all schedule change requests in advance. Switching shifts can create problems when people
start to work overtime, working more hours than the budget allows and potentially breaking a law, if the
workers are youths. Be sure a manager is constantly aware of any proposed changes in the schedule.
Avoid Over-Staffing
It is often tempting to schedule more people than necessary in order to ensure that the business runs
without any kinks. The reality is, however, that there will always be a few kinks in the restaurant business.
Scheduling too many employees will increase your labor costs and reduce your overall profit, hurting your
business overall. If you find that you have over-scheduled, you can send staff members home early. Train
your people to work quickly, accurately and efficiently while also treating guests with respect and care. This
allows you to operate at a high standard while still hitting your target labor percentage.
See below for a useful worksheet recording employee labor hours, pay rates and total labor hours per shift.

Restaurant Employee Wages and Benefits

Wages and benefits vary slightly from restaurant to restaurant, even for the same position. If you are a
manager hiring people for the first time, or simply assessing wages in order to make changes to your
current payroll, check out the average national statistics.
Restaurant Employee Wages
Median Wages for Restaurant Employees
Restaurant worker wages are different depending on the type of restaurant, the geographical location, and
the worker responsibilities. The chart below illustrates several restaurant workers' average hourly and
annual wages, as well as the highest and lowest percentile wage estimates for the jobs, according to the
United States Bureau of Labor Statistics:1

Employee Position

Hourly Wage
Average

Annual Wage

Lowest Lowest highest Average highest

percentile
percentile

Food Service Managers:

$23.39

$13.58 $35.61

$48,660

$28,240 $74,060

Restaurant Cooks:

$10.56

$7.27 $14.55

$21,960

$15,120 $30,270

Fast Food Cooks:

$8.11

$6.34 $10.34

$16,860

$13,180 $21,510

Restaurant dishwashers:

$8.20

$6.56 $10.38

$17,060

$13,640 $21,580

Bartenders:

$9.49

$6.66 $14.50

$19,740

$13,850 $30,170

Restaurant Hosts/Hostesses:

$8.54

$6.54 $11.34

$17,770

$13,610 $23,580

Waiters and Waitresses:

$8.93

$6.31 $13,120 $18,570

$13.55
$28,180
(with tips)

Minimum Wage
Minimum wage is the lowest rate businesses can legally pay their employees. In the restaurant industry,
employees' salaries are often determined by assessing the national minimum wage and raising it
accordingly. As of July 24, 2008, the minimum wage is $6.55 per hour.2 Minimum wages increase every
year.
Learn More

Common Restaurant Employee Benefits

Tips
Tips are often considered a benefit of working in a restaurant, but many servers and bartenders would most
likely consider it part of their income. These restaurant workers usually work for a pay rate of less than
minimum wage, but take home a good deal more based on their tip income. Tips are sometimes distributed
among kitchen staff and bussers as well. Unlike other restaurant benefits, tips are given by guests, not
restaurant owners. Learn More

Meal Benefits
Restaurants often offer daily employee meal benefits to their workers. These usually involves one
discounted or free meal from the restaurant menu per employee per shift. However, each restaurant meal
policy is different, depending on corporate rules, food type and budget. Learn More
Paid Time Off
Restaurant managers may receive a certain number of paid sick days and vacation days, depending on the
restaurant's policies. Hourly workers typically need to request time off in advance and do not get paid for
vacation days or sick days.

Uncommon Restaurant Employee Benefits

Insurance
Restaurant managers and other supervising positions are often entitled to insurance benefits in the
restaurant. Sometimes these benefits are even extended to hourly workers, but this depends on the
company. Insurance benefits typically include the following:

Medical
Dental
Vision
Life
Disability

401K
A 401K is a tax-deferred retirement savings investment plan sponsored by an employer. Employees who
are offered a 401K plan transfer a portion of their income to the 401K account each month and plan to
withdraw it after retirement. Much like insurance, 401K plans are not offered by all employers, and when
they are, they are mainly offered to managers and assistant managers. Since many restaurant workers are
youths who may not be fulfilling their careers in the restaurant, 401K benefits are not quite as common for
these hourly workers.
Stock Options
Stock options are a rare benefit, and one that almost exclusively offered to restaurant managers or
partners, if ever. However, in 2000, the United States House of Representatives passed a bipartisan bill
amending the Fair Labor Standards Act (FLSA). This bill allows restaurants owners to offer stock option
bonuses to hourly restaurant employees. According to the National Restaurant Association, the passage of
the bill was a major step in improving restaurant employer-employee relationships. 3 Stock options are often
seen as a way the employee can make money in the stock market. Thus, a benefit like this may improve
recruiting results and employee retention in the restaurant.

How to Make a Restaurant Schedule

A restaurant schedule is essential to your operation. Not only will the schedule delineate which employees
will work the daily shifts, the schedule is a crucial way to anticipate the daily sales, control labor costs and
ensure that all parts of the operation have the help they need to run smoothly. The most important goals of
the restaurant schedule include guest satisfaction and controlled labor costs.
Finding the Staffing Balance
Staffing your restaurant requires a certain finesse. A manager has to keep in mind that a restaurant
schedule needs to reflect the business needs first. This includes the quality of service your restaurant
provides its guests, as well as keeping labor costs under control. A big part of this balance is achieved by
appropriately scheduling staff members.
Some restaurants find it difficult to avoid the temptation to overstaff. Overstaffing the restaurant can help
provide improved attention and service to guests, but can cause your labor costs to diminish any profits you
receive. On the other hand, understaffing can appear to be a viable way to save money. However, this
quickly leads to employee burnout and diminished service standards, which ultimately harms your business
more than the few saved dollars. Finding the balance and the perfect staffing levels for your establishment
takes practice and depends on the people you have hired, your restaurants patronage, your budget
allowances and other variables.
Creating the Schedule
When making the schedule for your restaurant, keep in mind that there are numerous ways to go about it.
Make sure to keep in mind that the simpler the better, since this can be a time-consuming process. Project
sales and labor data as best as possible to keep within your budget, and plan for the unexpected when it
comes to the employees.
Use Technology
There are several ways of actually making the schedule. Modern technology simplifies the process,
allowing for daily and weekly labor cost calculation as you plan. Some Point Of Sale (POS) systems are so
advanced that they will prevent staff members from clocking in too early and record when they clock out
later than scheduled. This is an easy and effective way to maintain your labor budget as well as your
schedule.
Make Predictions
As you work to create the schedule for each week, try to predict customer counts and sales. Predicting the
amount of business you will do in a given week is one of the keys to preparing an accurate schedule. After
all, your goal is to schedule for a well-functioning restaurant. Be sure to match these predictions with the
percentage of your annual budget and sales to ensure that you are hitting your labor cost target.
Mindfully Schedule Your Employees
Creating a schedule can be time-consuming and even tedious. You must keep in mind the availability of
each employee, as well as their skills and talents to make sure your restaurant has the people it needs to
run successfully. Scheduling a mix of strong team members and those who need extra help can be a good
strategy. It is also a good idea to stagger employees hours, overlapping them during busy shifts such as
lunch and dinner times.
Finally, be sure to collect information from employees beforehand, as far as their availability, vacation plans
and other needs. Of course, your main priority is to run the business, but try to be prepared with this
information so that you are not left with the task of covering shifts at the last minute.
Often, a restaurant will create a schedule to show how all the different areas of the restaurant will be
staffed. This is often called the Master schedule, and will reflect how the dining room, kitchen, bar and any
other areas of the restaurant should be staffed in order to handle the service the restaurant expects. The
example below shows the positions, days, times and even the labor costs of employing the staff:

Using the Schedule

Regarding scheduling, it is a good plan to have a set of regulations regarding how it will be used, where it
will be posted, how it can be altered, and how often a new one will be made. Consider these factors and
communicate any pertinent information to your employees. This type of planning can save a good deal of
headache for any manager.
Schedule Frequency
Some businesses will create a new schedule for each week, which can be a good way to stay abreast of
sales projections as well as staff needs or other variables. However, this is up to the restaurant.
Employee Access
Once you have created the schedule, hang it where your employees can see it and make copies of their
upcoming shifts for the week. Some businesses have the ability to post their schedules online so
employees can access it at home, school or work.
Altering the Schedule
No matter how much time and effort you put into creating the perfect schedule, no schedule is going to
remain pristine once tacked onto the staff bulletin board. A typical manager is often approached with
requests to change the schedule with a multitude of reasons. An employee may become sick after you have
created the schedule for the week, and you need to cover his or her shifts. An employee may want to take
more shifts to make more money. Another employee may have weekend plans and cannot work the time
you scheduled.
In cases like these, have a plan of action. Communicate to employees that managers are the only ones
allowed to make changes to the schedule, and must notify a manager at any time they need to change
anything. Some employees are more responsible than others, and it can be risky to let employees change
things without notifying a manager first.

How to Reduce Staff Turnover and Improve

Employee Retention in Your Restaurant
Hiring great restaurant workers is one thing. Keeping them is an entirely different thing. Most restaurant
operators realize that their employees are not typically planning on a long-term career in the food service
industry. At least, that is the trend according to research from the National Restaurant Association.
Research shows that employee turnover in a sampling of full-service restaurants lingered just over an
average of 78% in 1997.1 Almost ten years later, another report showed that employee turnover had risen to
a rate of 107% for another sampling of restaurants.2 Although comparisons between these two findings are
not direct, the research suggests that employee turnover in the restaurant industry is a growing concern for
owners and operators.
Reasons Employees Leave
There are numerous reasons for an employee to leave a job. However, the reasons can become amplified
by the high stress levels and relatively low pay rates in a typical restaurant. Some of the most influential
reasons employees leave their jobs are listed below.

Inadequate Pay Rate

Lack of Recognition
Not Enough Hours
Conflict With Staff or Management
Too Few Opportunities for Advancement

Lack of Employment Benefits

Best Ways to Encourage Employee Retention
Despite the numerous reasons restaurant staff leave their jobs, there are ways you can work to retain them.
Finding and training new employees can be a time-consuming and costly enterprise, so taking the extra
step to keep your best workers around will improve both your business and your peace of mind.
Offer Pay Raises
Studies show that about one third of all employees who choose to leave the workplace leave for a better
paying position elsewhere.3 You should not only offer competitive wages, but when you notice an employee
with consistently high performance, take the opportunity to reward them with a raise. Even a small increase
is important to keep your best people onboard.
Offer Care and Benefits
Take the time to get to know your employees as people. Learn about their families, pets, hobbies and
passions. When you build a relationship of respect and care, your people will feel better about coming to
work and likely return the sentiment. Another part of taking care of them is offering them insurance.
Whenever possible, offer a benefits package.
Recognize and Reward
Hardworking, committed and ethical employees can be hard to come by. When you find them, be sure they
are appropriately recognized. For instance, praise their work in front of their peers. This shows the rest of
the team that you like what you see. You might reward an employees achievement with a gift card or some
free movie passes. Small gestures like these can let the employee know his or her efforts are not going
unnoticed.
Be as Fair as Possible
Employees are looking for someone who is fair to them, especially when it comes to pay rates and
scheduling. When determining pay rates, pay fairly according to the offer given during the hiring process. If
the employee shows extra effort or increased achievement, then consider discussing a pay increase.
Scheduling can be a difficult task, but attempt to assign shifts based on labor budget requirements,
positions needed and requested time off. Remind employees that you need to run a business at all times,
and that your scheduling choices are made for the good of the company. Learn More

Improve Communication
Staff members may say they feel a lack of connection between the rest of the staff and the management
team. As a manager, be sure to promote healthy communication whenever possible. If you give direction,
be sure to follow up afterward. Hold staff meetings frequently. Greet and talk with each employee daily, or
as often as possible. Let staff members know what is happening in the business and make them feel that
they are a part of its successes.
Resolve Conflicts
Part of a managers responsibilities is to ensure that employees can work together as a team, even when
they do not especially like one another. Speak to the whole team about cooperation and the importance of
running the business. Take further action if needed, such as mediating a private conversation with just the
staff members involved. If the trouble is with your management style, you might speak privately with the
employee to see if you can resolve it. You may have to respectfully acknowledge the difference in opinion
but still make it clear that you are in charge of their paycheck when all is said and done.
Properly Train All Employees
From day one, all staff members in the restaurant should have an adequate training program. This should
include an orientation to the position and the restaurant, as well as all necessary information to perform up
to standard, including safety training, equipment training and customer service training, among others.
Employees who feel knowledgeable and comfortable in their surroundings will more often feel successful
and content with their position.
Provide Opportunities for Advancement
Whenever possible, consider each staff member for potential advancement within the business. For
example, take note of employees performance and interests, and offer training programs for hostesses who
want to become servers, or dishwashers who would like to move up to line cooks. These types of
advancements boost morale as well as interest in the industry.

Restaurant Server Training Guidelines

Most fine dining and casual dining restaurants employ a waitstaff to serve and care for the patrons. Servers
are an essential part of your concept; they deliver the positive attitude and respect that create a memorable
experience for dining guests. Just as a manager should expect a top-notch server, servers need solid
training and ongoing support to succeed.
Initial Training
When servers first start in a restaurant, training is essential. Even if the newly hired server has experience
working in a restaurant, they will need an orientation to the new environment, new procedures and a new
management team. They may even have acquired some bad habits in their past jobs. Train your new
servers right from the start by educating new hires in the following areas:
Restaurant concept. Inform your employees of the history and other interesting facts about the restaurant.
Often the restaurant name, founder, owner or structure will have some special meaning or interest value
which can engage the patrons and make them feel like part of the concept itself.
Restaurant layout. Servers spend their entire shifts on their feet, moving quickly between the kitchen and
the dining room floor. Proper orientation to the layout of the restaurant, including restrooms, emergency
exits, storage rooms, kitchen space and dining room arrangement are important to a servers speed and
comfort in the restaurant environment.
Menu knowledge. Managers often provide new servers the opportunity to taste several items on the menu
before serving them. In order to sell the items, it is essential that servers sample as much as possible so
they can suggest a favorite or describe the flavors of the special. Additionally, guests often want to know the
nutritional information of dishes, or how they are prepared.

Etiquette. Proper service etiquette is paramount to a memorable dining experience. Servers must be
adequately trained in exceptional customer care before they begin working shifts. Provide opportunities to
practice proper serving techniques and etiquette by engaging in role-modeling exercises, or by pairing more
experienced workers with new ones.
Emphasize the desirable traits in a restaurant employee.
For example, use the acronym S.E.R.V.I.C.E. to remind your servers of how they should portray
themselves.

Shadowing. Many restaurant owners or managers will require that all new hires spend time shadowing, or
following other servers throughout one or more complete shifts. This allows the more experienced server to

model proper server etiquette, menu knowledge and responsible behavior to the new hire, easing him or
her into the new role.

Instill the right behaviors. Throughout the initial training period, instilling the correct behaviors in new
hires is crucial. One of these crucial habits involves writing orders down. This shows a desire for precision
and eliminates embarrassing, forgetful moments. Other behaviors that deserve emphasis include:

Completing cleaning duties throughout the shift

Helping team-mates whenever possible
Leaving personal issues at the door
Ongoing Training
Though your experienced servers may not require intensive training sessions, ongoing training can help
improve skills and address any recurring issues.
Improve suggestive selling skills. As servers become better acquainted with the restaurant and the
menu, they are able to suggest the best appetizers, the most profitable entres and the most irresistible
desserts to improve their sales. Some ideas to help guide employees in this direction include the following:

Becoming familiar with the menu

Learning which menu items are most profitable
Gaining knowledge of daily specials
Selecting favorite menu items
Suggesting wine pairings
Upselling menu items

Ignoring vs. smothering a table. When serving a table, it is important to find the balance between ignoring
the patrons and spending too much time with them. Training a server to read the attitude at a table is a
good way to tell about how much attention they need. Customers who consistently look around the
restaurant are probably looking for their absent server. However, customers who make minimal eye contact
or continue their conversation in the servers presence probably want less attention.
Improve multi-tasking skills. At all times, servers should be considering the needs of their tables. They
should be constantly aware of whether the tables need food or drinks, if the plates need clearing, and if the
patrons are ready for a check. Additionally, servers should be aware of their teammates, helping to run food
or refill drinks if they could use some help.

Conducting Inventory and Tracking Usage in

the Restaurant
Home > Education Center > Restaurant Operations > Conducting Inventory and Tracking Usage in the
Restaurant
Inventory signifies all food, beverages, serving supplies and cleaning supplies you have in the restaurant.
Every piece of inventory should be counted at least once every week so that you can prepare menu items
for your customers and stay in control of the goods you have on hand.
The Purpose of Conducting Inventory
Critical Control Items
In the restaurant, there are likely a few items that are top sellers or especially important to your menu.
These are also called key items, or "center of the plate" items. These items should be inventoried every day
before doors open for sales. Daily critical control counts will help you keep better track of those important
items, and help you keep your kitchen staff accountable in case something is spilled, overcooked or stolen.
The main purpose of conducting inventory counts is to measure the amount of food, supplies and other
products your restaurant uses over time. This usage can be converted to a cost, which is then compared to
total sales for a given period. This way, you can get a feel for how much profit your business makes from
the product sold.
Taking inventory affects your ordering processes as well. It lets you know how much you have as well as
how fast it is being used, and thus how much you need to order each week. After all, if you have too much
fresh food in the refrigerator, it will go bad. If you do not have enough, you risk running out of food and
disappointing your guests.
How to Count Inventory
Total inventory is typically counted once a week. To avoid problems with counting, it is good practice to
have the same manager, or better yet, pair of managers, count the inventory every time. Since it is
physically counted by hand and by sight, it is important that the same hands and eyes are counting it every
week so that counts are consistent. If possible, have two managers to count the inventory in case one
manager is unavailable one week, as well as to have two pairs of eyes consistently verifying the counts.
This can be done with the general manager and the kitchen manager, for instance.
Use Accounting Software
Using accounting software makes taking inventory ten times easier. The software installs in your back office
computer and keeps track of all your counts, even creating weekly reports so you can easily see any
changes or discrepancies from week to week. If you do not have financial software, seriously consider
making the purchase for the sake of convenience and accuracy.
Follow these steps to conduct an inventory count:
1.
2.
3.
4.
5.

Start a new inventory report in your accounting software.

Print an inventory count sheet (see example below).
Take a physical inventory and write down the amounts of all food and supplies on your count
sheet.
Enter your counts into your accounting software.
Run variance reports to find any discrepancies between theoretical and actual usage.

Example of an Inventory Count Sheet:

In the count sheet above, the item and unit of measure is constant. The "inventory" column is where the
manager taking inventory writes in the numbers of every product counted. The "unit price" column is
included to show the worth of the individual item, and the "total cost" shows how the total worth of the entire
stock of that item.
Variance and Usage
Variance is the difference between theoretical usage and actual usage. Theoretical usage, also known as
ideal usage, is the amount of inventory your restaurant sells according to your Point of Sale (POS) system.
Every time a cashier or server enters a sale, the POS records the food and other supplies needed to make
the product, thereby recording the amount of inventory used. Theoretical usage is also made up of any
wasted or spilled items that are recorded and entered into the POS or accounting software.
Actual usage is determined by your inventory count. Basically, the inventory you count should be the same
as what the accounting software tells you that you have left after your sales. Ideally, there should be no
variance between the theoretical usage and the actual usage, meaning that the menu items are prepared
correctly and use no more or less product than what the POS records. In real life, actual usage and
theoretical usage are rarely exactly the same. A variance could be the product of poor counting, food
product that was spilled and not accounted for or employee theft, to name a few common reasons.
To locate any variance, you can run a report comparing actual and theoretical food cost. The report might
look something like this:
Sample Actual vs. Theoretical Usage Variance Report:

In the sample section of the variance report above, you can see that two items are being analyzed:
blueberry muffins and banana muffins. For blueberry muffins, the actual usage, or the amount of muffins
sold off the menu, exceeds the theoretical usage, or what was entered into the POS, by seven muffins. That
means that more muffins were sold (or eaten, or spilled, etc) than the POS accounted for. This results in
lost money$3.78 to be exactdue to those seven mystery muffins that were never tracked. For banana
muffins, the opposite is true. This is likely due to a counting error or keystroke error in the POS.
Depleted Inventory
There are a number of reasons why your restaurant might experience a loss in inventory. The following are
the most common reasons why restaurants lose product:
Waste. It happens in every restaurant. A server accidentally spills a plate of food, or a kitchen worker burns
several pieces of steak. No matter how it happens, restaurant staff should get into the habit of recording all
wasted items. An easy way to do this is by handwriting the item, the amount wasted, and the reason it
happened on a clipboard sheet. This way, any missing inventory is accounted for when analyzing usage.
Additionally, managers need to learn why food is being wasted and how they can rectify the problem. It
could be that employees are working irresponsibly, or perhaps they are unaware of how to correctly prepare
the food, in which case the employees may require further training.
Poor Food Handling. Although typically another way of wasting food items, poor food handling is one of
the biggest contributors to depleted inventory. Commercial kitchen operators would do well to implement a
mantra of "label, date, rotate and consolidate" with kitchen staff. When food is properly labeled and correctly

dated, workers know what to use and when. Proper first-in, first-out (FIFO) rotation is essential for reducing
food spoilage, and proper consolidation from large, unwieldy containers to small, manageable ones will
keep food fresher and more visible for use.
Complimentary items. Sometimes, restaurant workers have an important reason to give a customer a
complimentary item. Perhaps a customer is valued for his return business, or a pair of customers are
celebrating a special occasion at your restaurant. Even for situations where free items are given as rewards
rather than compensation for an unpleasant experience, managers need to approve all comped items. This
is to verify the legitimacy of the transaction, as well as to appropriately account for the depleted inventory.
Theft. Insider theft is an unfortunate reality in many restaurants. Although this is not the norm, theft can be
a reason for lost inventory. Theft involves anything from eating restaurant food outside of employee meals
to stealing full bottles of alcohol. Keep an eye out for behavior that may point to restaurant employee theft.
Learn More
Quick Tip:
Use discretion when submitting food orders and avoid purchasing more than your restaurant needs. An
excess of product might signal to workers that wasting food or making mistakes is no big deal. Invariably,
more food ends up burned or on the floor. With less product to work with, food is handled more responsibly
and less is wasted. Learn More
Transfers. Transfers involve moving inventory from one department to another, such as from the bar to the
kitchen. It can also mean sending an item from one establishment to another, a common occurrence in
restaurant chains. Just make sure any transfers are accounted for so they do not negatively affect your
P&L.
Often, the best defense against lost inventory is simply recording any food that is wasted, any
complimentary items given and any product transfers in or out. To do this, you need to enter the items
appropriately into your accounting software systems, or manually record the costs as expenses. For
instance, if you comp a customer's meal, you can typically enter it into the POS system as such, which then
translates to your P&L. Learn More

Purchasing Procedures in the Restaurant

In order to produce your menu items for your guests, you need to order the proper raw materials for your
restaurant. This typically requires purchasing food and supplies from one or more vendors every week.
Choosing a vendor and placing an accurate food order can be a tricky process, so consider the following
guidelines when selecting vendors and purchasing inventory for your restaurant.
Choosing a Vendor
Choosing a vendor is much like hiring a new employee. It is best to find a company and people with whom
you work well and feel comfortable. At a minimum, a vendor is responsible for delivering food or supplies at
a price within your budget. However, do not make a decision based solely on price. You will need to work
out several details about product specifications, delivery times, and terms of payment, and so choosing a
vendor with whom you can forge a good working relationship will be helpful in the long run. Use the
following guidelines to find a vendor that will suit your needs:
Check references. Get to know the company, and ask them what other restaurants they serve. By
contacting those restaurants, you can get an idea about the vendor staff as well as the way they do
business. You are not only looking for someone to supply you with product, but someone to help you
succeed as well.
Look for quality product and service. Good vendors are not always the ones with the cheapest prices.
Without quality food and supplies, your restaurant will not bring in the customers and the revenue it needs
to survive. Additionally, quality customer service is the foundation of a good working relationship, so look for
a vendor who can provide great, consistent service to you and your restaurant employees.
Ask about packing dates. Before settling on a vendor, always ask about meat packing practices, if
applicable. Find out the typical time between the slaughter date, the packing date and the shipping date.
Although the topic is unpleasant, determining this information ahead of time is critical ensuring you receive
a fresh product. Check to make sure that there is never be more than six days between the kill date and the
shipping date on the meats you purchase.1
Keep vendors to a minimum. You probably cannot purchase all the products you need from the same
vendor. For instance, you usually need to purchase liquor and food from different vendors, and you may
even find that you need to order some food items from one vendor and other food items from another.
However, keeping track of a lot of invoices wastes time and energy, so try meet your needs with the fewest
possible number of food vendors.
Negotiating the Best Deal
Even when you find a vendor that appears to fit your restaurant needs, you may have to negotiate certain
aspects of your business relationship before all is said and done. Be sure to settle all your business terms
before securing a food vendor.
Negotiate product standards. You should feel confident that your vendor will provide quality food products
for your restaurant. In the event that 10 cases of potatoes arrive and half of them are rotten, you want to be
sure that your vendor will take care of the problem. Adhere to your standards and make sure you know that
your vendors guarantee their products in the event of a mishap or problem.
Discuss the delivery schedule. Most vendors service other companies in addition to yours, so you may
need to negotiate a schedule that works for you both. Do not schedule deliveries for peak business times at
your restaurant, and agree on a window of time in which the delivery should arrive. Many restaurants
choose early morning hours for delivery times.
Settle prices and payment terms. Product prices and terms of payment involve negotiation. Be sure you
discuss product specifications, including item quantity, overall yield and the prices expected for the
products. Maintain stringent standards and keep quality your priority. Additionally, be sure to discuss
payment terms. Many vendors want payment within 30 days or less, but others may offer more flexibility
policies and requirements vary by vendor.
Determining How Much to Order
When purchasing supplies, pay attention to your inventory levels as well as your sales throughout a given
period. Try to create a system for ordering in your restaurant so that you spend your money wisely and
keep your food cost in check.
Who Places the Order?
The person in charge of purchasing needs to know the kitchen inside and out, and be able to make the best
choices for the restaurant's needs. Depending on the operation, kitchen managers, executive chefs and
general managers are usually good choices for this position. Usually, having only one or two persons
responsible for all the purchasing for the restaurant can help keep things under control.

Pars and Build-To Amounts

An efficient way of establishing order amounts is to use a system of "par levels," also known as "build-to

amounts." These are synonymous industry terms for the amount of food and supplies your restaurant
should always have on hand for the coming period between deliveries.
Par level. The best way to determine par levels is to keep an eye on your actual usage over a period of
time. After a while, you will get a feel for how much of every item you need to have on hand each week to
accommodate your sales. When it comes to determining par levers, experience is the best teacher.

Example
If you find that you are going through 10 -12 packs of hot dogs every week, your par for hot dogs might be
twelve packs. Twelve packs may be too much some weeks, but you might order them as a safeguard in
case you unexpectedly run out of hot dogs. Just be careful not take this too far. Ordering too much
inventory has a negative effect on your food cost and actually increases the odds that your kitchen staff
might get careless and waste more food.
Build-to amount. The build-to amount is just another way of saying par level. When ordering, you
essentially need to "build" your inventory to par level. Before purchasing food, you should have build-to
amounts or par levels in place to know how much you need to order every time. Ordering too much can add
to your weekly expenses and increase food costs for the period. Purchase too little, and you might run out
of food or supplies before the next delivery. To determine the order amount you need for your restaurant,
take the "build-to amount" and subtract the amount you have on hand.

For instance, as you look through your inventory, you see that you only have one case of potatoes on hand.
Your par level for potatoes is five cases.

Using an Order Guide

One of the first steps in figuring out how much food or supplies to order is by determining the inventory you
have on hand at the time. Usually this requires taking a look in the walk-ins and storage areas to determine
what and how many items you already have in your kitchen. It helps to have an order guide that you can
print out and use as you look at your inventory on hand. Your order guide should detail the item and unit of
measure, as well as the inventory you have on hand, the build-to amount or par level, and the resulting
order amount. Keeping track of several previous orders will help you determine how much to order this time
around.

Projecting Sales for Accurate Orders

Most restaurants will negotiate weekly deliveries for their food and supplies from their vendors. One thing to
look out for is the number of days between the time you order and the time you receive the delivery. If you
have several days to wait for the delivery, you will need to factor in the sales your restaurant sees during
those days in order to purchase enough food and supplies to make up for it.

Determining Your Projected Sales

Determining your projected sales is one way can help you estimate about how much business you will do
between the time you placed the order and the time you receive it. Use the following guidelines to
determine the projected sales:
1.
2.
3.
4.

Estimate the per person check averages for dinner sales throughout the week.
Make an approximation of how many guests your restaurant will see for the dinner meal period
each day.
Total the customers and multiply by the estimated check average.
Repeat the above steps for all meal periods and any other sales, such as bar sales.

The total guests attending dinner service throughout the week is estimated to be 700 guests.

Example
1.
2.

3.

4.

The check average for dinner sales are typically $15 per person. Determine this by looking at
check averages in the Point of Sale (POS) reports from previous weeks.
Approximate the number of guests served each day. This information can also be determined
using data from POS records from previous weeks:
1.
Monday: 60 guests
2.
Tuesday: 80 guests
3.
Wednesday: 70 guests
4.
Thursday: 100 guests
5.
Friday: 150 guests
6.
Saturday: 170 guests
7.
Sunday: 70 guests
The per-person check average of $15 multiplied by 700 total guests will result in the projected
dinner sales for the week:

Repeat this calculation to determine the total projected sales, which includes lunch sales, bar
sales, sales during off-peak hours and sales from catering.

Your projected sales total is just an estimate, of course, based on previous sales, or even how much your
restaurant brought in at the same time last year, if your restaurant has been open that long. After a few
orders you will get a better feel for your sales trends. This is just another way to get a feel for how much
business you will do in the coming days, and if you need to order extra inventory or not.

Receiving Procedures in the Restaurant

Receiving food and supplies from your vendors requires more than simply taking boxes off a delivery truck.
Restaurant owners and managers should have procedures in place for any employee who handles
deliveries. Consider these suggestions for ways to manage deliveries and other receiving procedures in
your restaurant.
Verify Quantity and Quality
Whenever a restaurant receives an order, the manager or responsible employee should "check in the
order," or verify that the correct amount of products were received as well as checking the quality of the
incoming product. Follow these steps:
1.

2.

3.

Verify the quantity. Be sure that every product you ordered is accounted for in the delivery. An
easy way to do this is to compare your order guide to your invoice and manually check off all
items as you look through the delivery. Be sure that product weights and counts are correct.
Dealing with Damaged Products
Some vendors refuse to refund or replace damaged items once you have signed the invoice. Be
sure you have negotiated all terms of your business relationship with your vendor in case you
receive damaged or unusable products in your delivery.
Learn More
Ensure quality. Be sure the items are of good quality. All refrigerated or frozen items should
arrive at the proper temperature, and products should show no signs or damage. However, for
one reason or another, food products may arrive unusable. When product is received in poor
condition, such as moldy or rotten, the manager should refuse the order if possible, and contact
the vendor immediately to schedule another delivery.
Check the cost. Make sure the total cost on the invoice is correct. The money you spend on food
orders and other supplies usually makes up a large part of your restaurant expenses, and
recording the appropriate amount in your financial records is very important to your overall profits
and losses. Learn more

Keep Track of All Purchases

Keeping track of all purchase invoices will help you stay organized and aware of your spending. When you
receive your order, record the total cost the order invoice on your restaurant profit and loss statement
(P&L). You can easily log this data in most accounting software, or in a P&L spreadsheet on the back office
computer. This will also help you calculate your inventory and usage, since you add the newly purchased
goods to those you have on hand to determine your total available inventory. Learn More
Date and Store Supplies
Once you have checked your food for quality and recorded the cost and inventory amount in your records,
you are ready to put away your food and supplies. This should be done immediately to ensure that food
remains at safe temperatures and to keep an organized kitchen. For perishable foods, this involves dating
and appropriately storing the products on your restaurant storage and shelving units.
Maintain clean, safe storage areas. Store all incoming perishables at safe temperatures, and make sure
all storage areas are clean, sanitary and free from trash or debris.
Properly rotate all food items. Store all incoming food items behind those that are already in your
refrigeration or storage units. This process of rotating product is known as first-in, first-out (FIFO), and
ensures that the older product is stored near the front so it gets used before the new product. Be sure you
train all your employees in FIFO rotation to ensure the best food quality and storage procedures in the
kitchen.
Label perishable foods. Most manufacturers will give you the appropriate shelf-life information for their
food products. Shelf-life is the time the food can sit in the pantry, in the refrigerator or in the freezer before
being prepared and used. Create a specific shelf-life chart that you can hang in your commercial kitchen to
give your employees a quick and easy reference when labeling incoming product.