Contributed by Kerry Carney, Chief Financial Officer
The Chief Financial Officer (CFO) has a reputation for being a number cruncher. The reality of the situation is that CFO’s are increasingly expected to be innovators and problem-solvers. This is exceptionally true in the restaurant industry due to the fast pace and low margins. The CFO is often looked to for strategic decisions about everything from staffing, product procurement, vendor management, technology and more.
Whether you are a dedicated CFO or an owner/operator acting as your own CFO, the nightmares are the same. We all find ourselves grappling with the issue of how our restaurant can be more profitable. We are often the first one in and the last one out of the office, always wondering “how can I improve the business?”
Below are three major issues that keep all restaurant CFO’s up at night:
Reducing Prime Costs Without Compromising Quality. In a restaurant the prime costs include the cost-of-goods-sold (COGS) and labor. When a restaurant has prime costs that are too high profits are lowered. Alternatively, if a restaurant’s prime costs are too low we risk poor service, low employee morale, or inferior product.
The best way to control prime costs is to track them consistently and educate managers on what they can do during every shift to support your efforts. Managers can actively optimize prime costs every hour through proper benchmarking, forecasting, labor scheduling and limiting overtime, reducing wastes, and preventing fraud.
Creating a Positive Cash Flow. The old adage “Cash is King” is true on so many levels for a restauranteur. Positive cash flow happens when the money brought in through sales exceeds the money paid out in expenses. While it seems simple in theory, operators are often juggling so many responsibilities they struggle to keep up with the day-to-day financials that determine the overall health of the business.
Having a positive cash flow goes beyond just having funds to operate and turning a profit. In order to create opportunities to reinvest in the restaurant and grow the business we need a clear picture of both the real-time finances and the future outlook. Our industry is a dynamic one; restaurants that do not prioritize growth and reinvestment will become irrelevant.
Integrating Technologies to Support My Efforts. For a CFO, everything is about data. Where is it? How accurate is it? How many hands have touched it? How long will it take me create a report that means something to others?
Technology has become a real game changer in our industry. The data has always been available, but modern business intelligence (BI) software can now link all that information together and paint an overall picture of what is happening in the business at any given time. It turns raw data into something meaningful that we can act on. The data enables us to make quick, informed business choices. We know what is working and what is not. Best of all, as we begin to bring all the data together into one centralized database it becomes easier to manage.
Perhaps a good BI platform that takes the guess work out of managing the business is what every restaurant CFO needs to get a good night’s sleep.