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The magic nickel

Did you know there's only a nickel in profit for every dollar in revenue in the typical restaurant? Competent operators in today's highly competitive marketplace make only a nickel in profit on every dollar of revenue! And this assumes we have savvy management, working equipment, efficient operating systems and cost control measures, excellent customer service standards, a loyal customer base and a favorable reputation. Gulp.

It's no surprise that cutting costs is one of the most important skills a foodservice owner or manager can master. It's for this very reason that we tend to think small — a nickel here, a dime there — instead of "big picture." We don't make nearly the money we deserve. Foodservice is one of the toughest businesses in the world. But there's hope. As one of my management mentors Peter Drucker says, "If you can measure it, you can manage it."

Where does the other 95¢ go?

Take a close look at your income statement and examine where all those nickels and dimes are being spent. We'll walk you through a detailed income statement as a guide. Is your spending within industry standards on items like linens, employee benefits, and occupation costs? Are you doing everything you can to keep prime costs under control?

Even though I normally don't advocate a big focus on cost controls (I tend to more of a "gross-sales-solve-all-problems" kinda guy), carry a nickel in your pocket as a reminder that even though profit margins are small, a bunch of nickels can still add up to big dollars.

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