Balancing a restaurant budget can seem like a daunting task, but the process is simple.
Whether you’re interested in opening a restaurant or already own one, knowing how to budget for restaurant maintenance and other things is crucial. Without proper budgeting, you can overspend and put your restaurant at risk of having to be closed.
Creating a restaurant budget plan is all about knowing what’s going on with your money and knowing where to put it. While many people have a hard time with this, we’ve put together a list of several things you can do to make the process easier.
Keep on reading to learn everything you need to know about restaurant budgeting in 2020!
Figure Out an Overall Budget
When it comes to restaurant budgeting, one of the first things you’ll want to do is figure out how much money you can spend. Only after coming up with an overall budget can you decide where you should put the money. Balancing a restaurant budget will require you to look at how much money you have coming in compared to going out.
Your restaurant budget will vary depending on the year because you won’t have consistent sales. However, you should be able to spend around the same amount each year unless your business is declining. As you grow, you can increase your budget because you’ll have more income to put back into the business.
To come up with a budget, start by looking at how much of your money goes into stock, payroll, equipment expenses, etc. Look at how much money you make from sales, delivery, and any other source of income your restaurant has.
You’ll want to have enough money to cover all of your expenses before you do anything else. After the expenses are covered, it’s best to set money aside in case you need it for unexpected expenses. Decide how much you’d like to set aside and how much you want to throw back into the business.
For example, if you have $150,000 left after covering your expenses, you could save $100,000 and use the remaining $50,000 to purchase new equipment.
Advertise Effectively
Advertising is something that many business owners struggle with because they typically go about in the wrong way. Unlike the past, you can’t put up local ads and expect people to start flocking to your restaurant. While it will work in some areas, you’ll need to take your advertising to the internet.
Social media platforms are ideal for advertising to local audiences because you can target people from a specific location. Whether you have a chain of restaurants or a single building, you can find people that live near the restaurants and show ads to them.
What makes advertising on the internet much more effective than posting physical ads is the fact that you can guarantee people see them. If you use something like Google Ads, your ads will be placed only on sites that receive a decent amount of traffic.
Monitor Your Stock
Within your restaurant budget plan, you’ll want to emphasize monitoring your stock. Not only will you want to know how much of a product you’re getting, but you’ll also want to know how often it sells. Many restaurants will continue purchasing a product that hardly sells, but this will do nothing but make you lose money.
If customers don’t like a certain meal, you’ll have a lot of food that goes bad. Instead of buying more of it, you can do away with it completely and remove it from the menu. Doing this will let you put that money into something else, such as a new menu item.
It’s best to have an employee check the stock regularly, preferably each day. They can go to the freezers and mark down how many products you have. They can then go onto the computer and see how many of the products sold.
From there, you can figure out how much of something was wasted. If you have a product that gets thrown out more than it’s sold, consider removing it because you’re just losing money.
Save Money On Equipment
Restaurant equipment can be quite expensive, especially if you’re trying to grow your restaurant into a large one. However, restaurant owners can save a ton of money on equipment by leasing it.
Instead of paying the money upfront, leasing equipment lets make payments on it. So if you lease ice makers, you’ll be provided with the ice makers and you can use them for as long as you make the payments.
After paying off leased equipment, your business will take 100% ownership of it. This will benefit startup owners because they won’t need to have that much money when starting the business.
The only downside to leasing equipment is that you may end up spending more money on it over time because of interest. However, that may be worthwhile if you don’t have much cash to spend but still want to open a restaurant.
Now You’re Ready to Start Restaurant Budgeting
Understanding how to save money on restaurant equipment and other expenses will let your business grow. After reading this article, you can start the restaurant budgeting process properly because you’ll know exactly what to look for.
Keep in mind that some of the main things to look at are your income and expenses. After you’ve figured out your finances, you can start looking into equipment leasing to help you continue saving money.
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