10 Bad Financial Practices

10 Bad Financial Practices That Can Sink Independent Restaurants

By Jim Laube

Great food won't do it. And neither will impeccable service or even the best location in town. Of course these factors are important, but a restaurant's success will always be limited unless the owner is not only a good operator but also knows how to make their restaurant grow and prosper.

Following is a list of common mistakes and bad financial practices that are unfortunately quite common among independent restaurants that can't seem to sustain an adequate profit, and ultimately brings down their businesses:

  1. Not using Financial Statement to Measure Progress and Results.
  2. Using a Generic Profit-and-Loss Statement.
  3. Basing Food and Beverage Cost Percentages on 'Total' Sales.
  4. Not Taking Account Beginning and Ending Inventory When Calculating Food and Beverage Costs (Using Optimum Control will help you).
  5. Financial Statements are Based on Cash Basis Accounting.
  6. Food, Beverage and Labor Costs are Calculated Monthly.
  7. Bookkeepers are Allowed to Handle Cash.
  8. Transactions In the Restaurant's Checkbook and Accounting Records are Not Reconciled.
  9. Not Reporting 100% of Sales.
  10. Employees are Kept In the Dark.
 
View the entire article in PDF - 10 Bad Financial Practices That Can Sink Independent Restaurants- Restaurant Startup & Growth Magazine - August 2013

Reprinted with permission of Restaurant Startup & Growth magazine Copyright 2014
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