quote:
Originally posted by hunt:
[qb] somebody please tell me where to begin[/qb]
You need to map out a business plan, Hunt. To accomplish this, you need to do some homework. Begin by laying out a basic menu concept of items you think will work best for you. For the time being, leave the pricing on the sidelines. Don't forget to include sides and beverages.
Next, formulate a monthly itemization of expenses: labor costs, occupancy costs, utilities, principal & interest, (if you're planning to borrow money) marketing costs,
serving supplies, (plates, napkins, silverware) taxes, dues, permits, maintenance, repairs, equipment purchses, etc.
Next, make a list of suppliers you'll need and contact them; get prices from them for the menu items you've already established. The idea here is to get a basic portion cost established for your main entrees, sides and beverages.
Now it gets a bit tricky. In order to establish a "cost of goods sold", you need to apply pricing. Here's how it works: say loin backs are selling for $3.00 a pound and average 1.5 lbs. each. A finished rack of ribs costs you $4.50. But wait, you rubbed them with seasoning, and will probably need to offer sauce with them...add another 25 cents. Net cost is $4.75. What do you charge for them? That depends on your food cost % target goal. For now, let�s use 38%�which is probably going to be a close number for your operation. What that means is, for every dollar of food sold, you want to spend no more than 38 cents. If your operation isn�t going to sell liquor, wine or beer, you can count the cost of your beverages as food too. So let�s assume you�re only selling a limited BBQ menu with soft drinks, and you need to achieve a 38% food cost. Divide 100 by 38. The result is 2.61. That number is your mark-up factor. So now multiply the cost of your loin backs by your mark-up factor�$4.75 x 2.61 = $12.40
Now keep in mind that $12.40 for a rack of loin backs may seem like too good of a deal. Remember that 30 lb case of loin backs you bought? One rack hit the floor and went into the trash. Chances are another one either got eaten by someone on staff, or was fed to someone because it was leftover at the end of the day. Until you get a handle on what your waste is, add back an additional 10% to the cost of your food. So your real cost of loin backs is $4.75 + .48 = $5.23 x 2.61 = $13.65
So now you need to identify a portion cost for everything on your menu. Simple, eh?
But you�re not done yet. You now need to forecast your sales so you can put together a cash-flow chart. If you�re starting up a new operation, this is the tricky part, as you have no history to go by. First, determine your days and hours of operation. How many seats will you have? Are you doing take-out? Your goal is to determine how many customers you�ll have on a given day. Is there a restaurant near your intended location? Drop by for a few meals and see how they�re doing. Heck, the owner might even tell you. Perhaps the local chamber of commerce can provide you some traffic information. You need to generate a reasonable number to work with. Let�s say it�s 50 lunches and 50 dinners.
So you now have a daily customer count and a lunch and dinner menu with prices. Next you need a per person sales average. Show your menu to 10 people and ask them what they�d order for lunch and dinner. Tabulate the total and divide by 10. That�s your lunch sales average and your dinner sales average. Be sure to add in sides and soft drinks.
Let�s say the lunch average is $6.75 and dinner is $11.50. Your 50 lunch patrons spent $337.50 and dinner patrons spent $575 for a total of $912.50. Because it�s new, you�re going to be open 6 days a week, 50 weeks a year. 300 days x $912.50= $273,750
Not a bad haul, eh? Oops, we forgot to subtract the cost of the food which was 38%
That drops the $273,750 by $104,025. You now have $169,725 left over. Remember all the expenses I asked you for on a monthly basis? Multiply them by 12 and subtract from $168,734. That is your net income from operations.
This is a blueprint for what you need to do. Also keep in mind that most restaurant go under from being under capitalized. You�ll probably need some wiggle room for awhile so you better be prepared for it. Good rule of thumb is 3 months worth of expenses.
Good luck and let me know if you have questions. I�ll be happy to help as time permits.