Lessons Learned the Hard way – Know what you are measuring.

I worked with a restaurant owner on his food cost management system.  He was meticulous about keeping his food cost under 30% of sales and had worked out the cost for every item on his menu in a spreadsheet and could rapidly look at the impacts of price changes to his bottom line.  A very nice management system to say the least!  However, he would regularly add all of his food vendor bills and divide by total sales for the week and he was coming up with a food cost of closer to 40% of sales.

I was called in to help him figure out the error in his spreadsheet and he was suspecting he had a theft problem.  It didn’t take long to confirm that his calculations were correct, and he was starting to look through security tapes with a grim look on his face.  While he started down that path, I looked at the other half of his double check, the total of the food vendor bills.  Turns out that he was getting all of his paper products like take out containers, napkins, cleaning supplies, from the same vendors.  The consumables accounted for the difference in the food cost percentages.

Sometimes it’s the small things hiding in plain sight that trip you up.

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