You’ve planned out your menu, your decor, the technology services your restaurant will use, and your company values, but fiscal year planning is one of the most important parts of your business that sometimes gets overlooked or put off for a later date. With a new year upon us, it is the perfect time to figure out how you want to plan for the next year to see your restaurant profits soar. Here are a few ways to help you prepare and see success with your fiscal planning in the new year.
13 Week Accounting Period
Moving to a 4-4-5 or 13 week accounting period instead of a monthly one will allow for your restaurant to make more accurate projections. Doing it this way instead of using the 12 month period will give you the same number of days, starting each week on a Monday and ending on Sunday. When you are comparing months, you are not necessarily getting an accurate number since some months have more days than others. Comparing Friday to Friday or Wednesday to Wednesday is more beneficial for a lot of restaurants.
It is important to know which expenses are at a fixed cost, meaning it does not change. This could be your rent, loan payments, insurance premiums, point of sale system or other monthly technology fees. Fixed costs are easy to add in your budget. Just add all of the amounts that come out consistently each month and there you have it.
These costs can change from month to month depending on the item making it more challenging to anticipate numbers and include in your budget. Variable costs are directly tied to your sales, but can be controllable in some instances. If your vendor raises the price of carrots, you can shop around or negotiate a price to try and keep your carrot cost down. Other examples of variable costs are restaurant repairs and labor costs. You want to keep enough in the budget to cover these expenses, but you want to do it in a way that gets you close to the correct amount. Guessing will only throw your budget off course and is not a good way to financially plan for your business, so thankfully there is technology that will help you track your expenses to know how much to plan for for your fiscal year.
To plan your budget, you will want to look at the previous year’s sales to adequately forecast for the new year. You can use your POS to access past reports and trends, making this process more efficient and giving you better accuracy. You want to look at sales reports, labor costs, guest headcount and the average costs of each check. It is also beneficial to look back at events at your restaurant, promotions and to consider economical changes that have occurred that could affect labor costs or menu prices. After you have compared sales forecast reports and created one for the new year, you are ready to create your projection budget.
There is a lot that goes into planning for your next fiscal year, but it is an important step in making sure your restaurant is heading in the right direction. Each restaurant might do things a little differently, so find what works best for your business and get to planning!