Page 6 - BRS - 010_04
P. 6
Originally featured on the Toast Restaurant
5 Restaurant Performance
Management Blog
Metrics and How to Calculate Them
f you’re a restaurant or foodservice business owner, there of the food and beverage items that you sell to guests. In this
I are certain metrics you need to track and evaluate over way, COGS is really just a representation of your restaurant’s
time in order to understand the health of your business. inventory during a specific time period. In order to calculate
By regularly calculating performance metrics, restaurant owners COGS, you need to record inventory levels at the beginning
can catch negative trends and identify areas that require and end of a given period of time, and any additional inventory
improvement. purchases.
Increasing a business’s efficiency and profitability doesn’t happen It is important to track COGS because it is typically one of the
overnight. There are so many moving parts involved in operating largest expenses for restaurants. By identifying ways to minimize
a restaurant - so many different costs and revenue channels these costs, like negotiating better rates with your food distributor
and factors that ultimately influence net profit or loss -that you or selecting in-season ingredients, it’s possible to significantly
cannot simply expect to make one change and see all operations increase margins. Every dollar you shave off COGS is another
and margins improve. Instead, operating a profitable enterprise dollar added to the restaurant’s gross profit.
requires constant tinkering and testing until you find the best
practices for your business. Calculating COGS
This article identifies five key metrics restaurant owners should If you have $5,000 worth of inventory at the beginning of
track regularly and how to calculate each of them. the month, you purchase another $2,000 during the month,
and end the month with $4,000 worth of inventory left over,
1) COST OF GOODS SOLD (COGS) your cost of goods sold for that month is $5,000 (beginning
inventory) + $2,000 (purchased inventory) - $4,000 (final
Cost of Goods Sold refers to the cost required to create each inventory) = $3,000.
PAGE
6 NEXT PAGE >>
