Mind Your Margins

Nick Swedberg

Americans love food.  We love to eat food, talk about food, watch food being made…we even love to take pictures of our food and share it with our social networks.  This adoration has grossed an estimated $9.5 billion dollars in Minnesota restaurant sales in 2016, according to the National Restaurant Association.  This explains why there are so many restaurants starting up each year but it also causes one of the highest closure rates of any industry.  Being a restauranteur is HARD.  The job comes with long hours, little pay and dealing with some unhappy, entitled people.  After all of that hard work, a finely tuned restaurant averages only 4.1% in net income.  Not exactly yacht money.

How do restaurants stay open and beat that uninspiring 4.1% average net income?


Knowing your Margins

Trying to guess or estimate what your true margin is on food, wine, liquor or beer is NOT going to work long-term.  A small dip in margins can cost thousands of dollars in lost profits and correcting it could be as easy as talking to your employees.  Knowing your margins allows you to focus your time where it will be most productive and profitable.  If your liquor margin is 5% lower than it should be, focusing your time on improving that margin will pay much more than trying to change your food margin which might be spot on.

It is also vitally important to understand the averages for your area.  Minnesota has one of the highest restaurant payroll costs of any state in the US.  Adjusting to your local market can save you a lot of headache trying to improve a margin that is impossible to move.


If you aren’t positive what your margins were last month, we are here to help!  Please call me to discuss processes and procedures you can implement to make calculating your margins a smooth part of your month-end process.  Less time calculating margins leaves you more time to work on improving them….leaving you more time to shop for your yacht – or at least a kayak.


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