It’s difficult to find a business that lives and dies by its gross margins any more than a restaurant. Margins can make a restaurant very profitable, but failing margins will close the doors for good.
We began working with a local restaurant, providing very basic services like tax preparation and financial statement generation. But everything we did focused on the past…what happened last month or last year. We were asked by the owner to prepare real-time financial reports and weekly profit & loss reports so he could track his margins. With our assistance, he was able to improve his margins by nearly 9% after he was able to see the areas that needed improvement each week when reviewing our reports. His year-end profit increased by nearly $60k by engaging us in this enhanced role.
Restaurants are among the most difficult businesses to run, manage and sustain. Let's face it....tastes are fickle. But bad food is only one reason that most restaurants fail, and I bet it's not even in the top three. I would bet that the top three reasons relate to finances. We hoped when Start-Up School was formed, we would have the chance to work with more restaurateurs (yes, I did spell this word correctly....check it if you don't believe me) from the beginning to make them aware of what they didn't yet know about restaurant finances. For us, that's rewarding work and the ultimate "pay-it-forward." Who knows...I may get some free entrees out of this!
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