The Income Statement: The Single Greatest Key to Success

It has been said that the restaurant business is a business of pennies. I believe that is true, and there has never been a more important time to track each and every penny coming into your operation. I can read an income statement quickly and, without even seeing your operation, I can tell you if someone is stealing money; someone is giving away beer, alcohol or food, and even if product is “walking” out the back door. No matter how much experience you have, you can miss what may look like a small detail on the income statement, but it can be the difference between profit or loss. 

My next two columns will tell you how to correctly produce your income statement, and then how you can use it to improve your operation. 

Cost of Goods (COGS)About 90 percent of the clients that come to me (both experienced and novice) have calculated their COGS incorrectly. They are showing extremely low costs and cannot understand why they are losing money. 

Example: A restaurant has a food cost…