The handbook · Run and grow
Day to day finances
Many restaurants do not go under from one bad month. They go under from twelve months where nobody counted.
Summary
Follow four numbers every week: sales, food cost in percent, staff cost in percent and what is left. Food cost should sit around 30 percent of sales without moms, the Swedish VAT, and staff cost between 28 and 35 percent. If food, staff and rent together pass 80 percent, there is nothing left for you.
Numbers to plan with
- 30 %
- food cost as a share of sales without moms is a good benchmark
- 28 to 35 %
- staff cost as a share of sales in a well run place
- 30 minutes
- a week is enough to stay on top of it
- 80 %
- is the ceiling for food, staff and rent together
The weekly routine that takes half an hour
Set a fixed time, for example Monday morning. The same time every week makes it happen. Go through five things and write them in the same document every time.
The point is not exact figures. The point is that you see the direction long before the bookkeeping does.
- Sales last week, split into lunch, evening and online
- What you bought in kronor, taken from the invoices
- Hours the staff worked, including your own
- What is in the account and which bills are coming
- One thing to do differently this week
The four numbers that mean something
Restaurant finances are simple at heart. There are four numbers, and three of them have to be held down.
| Number | How you work it out | Good level |
|---|---|---|
| Food cost | Purchases divided by sales without moms | 28 to 33 percent |
| Staff cost | Wages with employer fees divided by sales without moms | 28 to 35 percent |
| Rent | Rent divided by sales without moms | 6 to 12 percent |
| Result before pay to you | What is left when everything else is paid | At least 10 percent |
Money in the account beats profit in the books
A restaurant can show a profit and still not be able to pay wages. What decides is when the money moves, not what the result looked like on paper.
Make a simple plan for the coming eight weeks: what comes in and what goes out, week by week. One sheet of paper goes a long way.
- Put the moms aside the same week you take it in
- Wages and employer contributions come every month no matter how business went
- Credit from the supplier is cheaper than credit from the bank
- Keep a buffer that covers one month of everything. Aim for three if you can.
Talk to the bookkeeper about the right things
An accounting firm does the annual accounts and the tax returns. That part they do well. What they rarely do on their own is explain what the numbers mean for you.
Book a call four times a year and come with questions. Fifteen minutes per quarter can save tens of thousands of kronor.
- Ask what the margin was per month, not only what the year gave
- Ask for a comparison against the same month last year
- Raise planned purchases before you make them, not after
Do the maths yourself
Do the numbers add up?
Change the numbers to yours. The result is what is left before your own wage, interest and tax.
Sales including moms245 700 kr
Sales excluding moms231 792 kr
Ingredients71 856 kr
Staff, rent and other140 000 kr
Left over in the month19 937 kr
- Ingredients
- Staff
- Rent
- Other
- Left over in the month
This is how many guests per day you need to break even: 62
The VAT is 6 percent on takeaway and 12 percent when the guest eats on the premises. It is not your money. Set the right rate below and work with the amount excluding VAT when you compare costs.
Common questions
Which reports should I look at every month?
A profit and loss report and a simple cash overview. Look at sales, food cost in percent, staff cost in percent and result. Four lines are enough to see if something is heading the wrong way.
How much profit should a restaurant make?
Ten percent of turnover is a good level for a smaller place where the owner works. Many are lower. Below five percent you become too sensitive to one bad month.
Can I do the bookkeeping myself?
Yes, in an enskild firma, a sole trader business, with a simple program. In an aktiebolag it works too, but the annual report is easier to hand to someone who does it every day. Many keep the running work themselves and buy the year end accounts.
What do I do if a month goes backwards?
Go through the three big numbers at once. If it is the food you have waste or the wrong prices. If it is the staff you have the wrong schedule. If it is sales you need more guests. Do not wait for the quarterly report.