The first order of business is to have a system in place that provides the necessary information to the decision-maker. All too often, restaurateurs are so preoccupied with the operational issues that price changes are delayed. It is not that the restaurateur is not cognizant of the need for changes, but there is no focus on them. To be constantly monitoring prices and implementing changes requires an investment of time that many restaurateurs feel must be spent elsewhere. Therefore, price changes become a chore rather than a necessity, resulting in putting off changes that most are reluctant to make. A system that provides analysis of the pricing will soon highlight when action must be taken.

A comparatively simple method of accomplishing this, and one that we strongly recommend, is to prepare a weekly "flash" report. This report does not require a lot of extra time to produce since it is a by-product of what should be done anyway. What it does require is discipline and timeliness. A spreadsheet should be set up that indicates the sales for the week, followed by purchases for the week. These figures can be taken directly from the sales register and purchase register. If these records are kept up to date, there is no extra work involved.

At the end of each week, preferably on the slowest day when the inventory is at its lowest ebb, an inventory count should be taken, again put on a spreadsheet. This is the only extra work; however, it is time well spent providing invaluable information. This would give a macro view of food and beverage costs for the week and, by being reflected on an on-going spreadsheet that reflects the previous weeks' figures, any trends will become evident. Also, while updating the pricing on the inventory sheet, any significant changes to a particular item would also become evident. This should send a signal to the chef that an updated costing-out of the menu is necessary.

If this method is utilized, management will have the information at hand to make the hard but necessary decisions, taking into account competition and other factors.

Incidentally, if anyone would like a sample of a "flash report," they should not hesitate to contact Letitia Reed of our firm.

The information given is provided for general, non-specific educational purposes only, and should not be relied upon as advice relating to your specific circumstances. For company-specific advice, consult directly with your tax advisor.

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James Conniff is the Managing Partner at Bacall & Conniff, P.C., a full service CPA firm that provides industry specific accounting solutions for restaurateurs. Their services include: Weekly flash reports, Monthly financial statements, Web-accounting, Optional bookkeeping & payroll services, and Comprehensive tax & advisory services. They can be reached at 617-367-3250.