Margin is counted once a month and lost every day
A report at month end shows the result when nothing can be done about it: prices rose on delivery day, write-offs happened on a shift, an extra person went on the rota three weeks ago. Margin is built from five floors, and on each of them a decision only means something on the day of the event.
Margin is counted on the first of the month, when the period is closed. It is lost every day: on delivery day, on a shift, on the day the chef changed a portion size and told nobody.
The gap between those two dates is the central problem of running a restaurant. A report 30 days later says how much you have already lost. A signal on the day says how much you can still keep.
The five floors of margin
Revenue. Guests x average check. A rising check hides guests walking away until the two are separated.
Cost. Purchase prices, recipe cards, staff meals, spoilage, stock counts, packaging, card fees.
Labour. Plan against actual, by department. Three cooks on the rota, five on the floor, same revenue.
Overheads. Rent, utilities, service contracts - they change rarely, and go unreviewed for years.
Marketing. Comps, tastings and discounts live here, not in spoilage and not in food cost.
Where it goes fastest
On the second floor. The purchase price changes most often and pulls every dish that contains the item with it.
A 4.2% rise got lost among forty lines and produced half the cost increase on the two best-selling dishes. Read the case.
And that rise was blamed on the season for five deliveries running. Read the case.
Why average food cost says nothing
Kitchen 29%, bar 37% - the report shows «29.4%, all good». The average kills both signals at once. The conversation starts where cost is calculated per dish on this week's prices - see the food cost page.
What to change in the routine
Look at the price on invoice day, not in the report. Purchasing signals arrive on the day of the document.
Calculate cost on current prices, not on a quarter's weighted average.
Split revenue into guests and check - otherwise a rise in one hides a fall in the other.
Compare rota against actual weekly, not at month end.
Which food cost is the right one?
There are three: simple - purchases against revenue; clean - by recipe cards; real - plus staff meals, spoilage and stock counts. Decisions need the real one.
Why not steer by the venue average?
Because it adds up zones with different natures. Kitchen and bar live by different norms, and the average hides both deviations.
How often should menu prices be reviewed?
When a dish goes past its target cost - and that is visible on the day the raw material went up, not at the end of a quarter.