I talk a lot aout the importance of keeping your finger on the pulse of your operation. Getting timely information about your Prime Cost — food, beverage and labor costs — is the first and most important step to take. Prime Cost typically accounts for 65% of the dollars you spend.
Awareness of an issue is often enough to improve performance. Encouraging employees to be sensitive to costs will lower them. But it's all relative. As a friend of mine recently said, "It's about as meaningful as a billboard in the middle of nowhere."
The real improvement comes when you can focus your attention on the specific areas that are out of line. But out of line compared to what? The answer is: out of line as compared to you, or others like you.
Here's what I hear frequently. My food cost is 36%... is it too high? That's like asking: I weigh 195 pounds. Is that too much? Well, it depends. If you're 5'2" the answer is yes. If you're a 6'4" the answer is probably not.
The same is true for foodservice. There are no absolutes. But you can come relatively close to knowing what should be right for you by comparing your operation to industry averages, and that's easy to do.
Each year the National Restaurant Association reports the results from thousands of surveys submitted by operators all over the country. The report breaks down the responses by sales volume, geographic area, concept type etc. You can order a copy of the report or, we've made it even easier for you to know where you stand... relatively speaking. Just download our nifty Prime Cost Calculator, answer a couple of questions, and we'll plug in the numbers for you.
The Restaurant Industry Operations Report is the NRA's top selling publication. To place an order, call the National Restaurant Association at (800) 424-5156 or visit their web site at www.restaurant.org.
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