Every few years, the National Restaurant Association (NRA) publishes the Restaurant Industry Operations Report. 2010 was the most recent report issued, so it's time to update the numbers. The NRA has posted the 2013 survey to its website (www.restaurant.org). The results gathered will form the basis for the 2013 edition of Operations Report. Participants in the survey will receive a free copy of the report as well as other state and region specific information.

About the Report:

The Industry report provides meaningful financial and operating information to restaurant owners and operators. Survey applicants are asked various questions about their 2012 financial results, including information on food costs, labor costs, average check, sales volume, occupancy costs, etc. The results are segregated by full-service and limited service restaurants. The full-service is further segregated by "average check per person" ranges, which are less than $15, $15 - $24.99, and $25 and over.

The compiled data is used to create schedules of industry averages for criteria such as average check, average daily seat turnover, cost per dollar of sales, number of employees, employee turnover, and others. It provides operators with benchmarks and metrics to measure their own operational results to those of restaurant industry averages. These results can be used as an important management tool to measure success and also to assess areas in need of attention.

KLR can assist in analyzing data:

One of the more helpful schedules for restaurants to measure how they are doing is the "Cost per Dollar of Sales" report. The chart below is formed from data taken from the 2010 Restaurant Industry Operations Report, Exhibit C-9 - Statement of Income and Expenses - Ratio to Total Sales. The percentages listed are averages for the full-service restaurant sector, with average check per person of $25 and over. It represents how each dollar received in sales is broken down by cost and profit.

*Includes employee benefits

The above information provides management with a good benchmark as to whether they are on the right track or not. We recommend reviewing costs weekly. Reviewing trends on a current basis helps management to see and address problems in the early stages of development, when adjustments can be made. Some trends may include:

• Areas such as rising food or liquor costs may signal the need to adjust menu prices or portion sizes or perhaps indicate a theft or waste problem.
• An increase in the average labor cost percentage may signal an over-staffing problem. Can staff hours be cut back without sacrificing client service?
• An increase in the advertising cost percentage should alert management to review the effectiveness of the advertising campaigns that have been launched. Are the dollars spent on certain advertising efforts generating the expected return on investment?

There are many additional areas/trends that management can benefit from by reviewing weekly, monthly and annually. Internal trends and benchmarks as well as external industry information can be very effective management tools. I encourage you to visit the NRA website (www.restaurant.org) and take the survey.

Whether it is for owner-operated businesses or established franchises, Boston accounting firms can provide valuable financial services to the industry. KLR’s Hospitality Services Group can help companies manage a variety of vital tasks and responsibilities. By working with this team of dedicated experts, hotels and restaurants can take advantage of essential elements such as hospitality accounting, menu pricing and assistance with the state sales tax process.