A short advisory video by Donald Burns arguing that the primary profit killer in many restaurants is lack of budgeting and budget discipline. The speaker recommends creating budgeted P&Ls by annualizing prior spending, examining each general ledger line, dividing totals by 12 to set monthly allotments (food, drinks, supplies, equipment, maintenance, etc.), and enforcing mindful purchase decisions to avoid overspending while allowing critical purchases.
Chapters
What's a common profit killer that is hiding in plain sight of most restaurants? The biggest thing is just the lack of budgeting. Lack of budgeting is the profit killer. Lack of budgeted disciplines. I know restaurants that just order whatever they need whenever they need it. Like, oh, we've broken too many plates, let's just order a whole round of plates. New silverware, new knives, new cups, new everything. I think about Amazon is the best thing and the worst thing for restaurants ever, right? Because most restaurants just have an Amazon account. A lot of the managers can just jump on with no discretion and just get whatever they want. One of the greatest disciplines I worked, I learned working for Metro Media Restaurant Group was just budgeted P and ls. So you look at how much you spent last year, you take your total annualized P L and you look at every single general ledger line, and then that total, you divide it by 12, and that's next month's budget, right? What's your average that you spent? So here's what your budget allotment is on chemical, here's what it is on food, here's what it is on drinks and paper and packaging. Here's what it is on supply and equipment. Here's what it is on repair and maintenance. Here's what it is on preventative maintenance, all of those numbers. And then I don't want to encourage anybody to shortcut those. I want you to spend all the way up to that amount it's allocated. But I want you to watch and not spend over it. So be thoughtful when you pull the trigger. Hey, I know we need forks and knives and steak knives and coffee cups, but it's the end of the month and what's the critical? Are they all critical? If there are critical, you blow the budget. You got to take care of the guests, you got to take care of the employee. But, oh, you know what? I just really need the steak knives. I'm down to four and I should have 40, so. But I'm not going to order 40. I'll just order 20 on this budget. And then at the beginning of the month, I'm going to load in all those other things that I need and load them. But it just makes you more mindful. It makes you watch, it makes you make everybody else accountable.
