|
| |
|
"Ringing Up More Sales In 1999",Robert
Ebbin, Restaurants
USA, June/July 2001(article breaks down the cost structure for
full-service restaurants, 1999)
Fullservice establishments posted a 1.2 percent sales increase in 1999, according to an analysis of the National Restaurant Association's Restaurant Industry Operations Survey — 2000. Operating expenses also rose in 1999, but at a lower 0.5 percent pace. Sales continued to grow at fullservice restaurants in 1999, according to an analysis of the National Restaurant Association's Restaurant Industry Operations Survey — 2000, which is based on respondent establishments that reported data for two consecutive years. Median sales per seat at fullservice restaurants advanced 1.2 percent in 1999, partly because of the positive U.S. economic climate.
According to the operations survey, the median pretax income of fullservice operators was 5.7 percent of sales in 1999, up from 4.7 percent in 1998. The survey was conducted in cooperation with the international accounting firm Deloitte &
Touche. Although sales rose in 1999, total median cost of sales per seat remained virtually unchanged compared with 1998. However, total operating expenses grew 0.5 percent. The increase in operating expenses can be attributed to higher marketing, general and administrative, direct operating and restaurant-occupancy costs. Salaries and wages accounted for the largest operating-expense category at fullservice restaurants in 1998 and 1999. The median salary-and-wage cost per seat at fullservice restaurants advanced only 0.1 percent in 1999 to $1,898.
Marketing expenses increased 4.4 percent in 1999 to $167 per seat. The growing intensity of the competitive environment plays a major role in rising advertising-and-promotional spending. Employee-benefit expenses declined 4.3 percent in 1999 to $290 per seat, and the ratio of employee-benefit expenses to total sales edged down from 4.8 percent to 4.7 percent. The cost of employee benefits includes employer (FICA) taxes, workers' compensation and health-insurance premiums.
Restaurant-occupancy costs, including rent, property taxes and property insurance, advanced 1.7 percent in 1999 to $298 per seat. Repair-and-maintenance costs rose at a faster 3.5 percent rate in 1999, while utility-service costs advanced 2.6 percent. General and administrative expenses jumped 2.1 percent in 1999 to $288 per seat. These expenses, commonly labeled overhead, include office supplies such as paper, postage and telephone expenses; data-processing costs; dues and subscriptions; commissions on charge-card collection fees; protective services; and other related general expenses.
Direct operating expenses, which include paper and cleaning supplies, linens, tableware and silverware, kitchen utensils, licenses and permits, and uniforms, are key to restaurant profitability and one of the leading controllable restaurant expenses. Median direct operating expenses rose 1.3 percent in 1999 to $387 per seat.
| Fact
of the Day, National Restaurant Association Examples:
Lunch: Males age 55 to 64 and females age 45 to 54
skip lunch the most often, skipping an average of 0.9
lunches per week. Individuals under age 13 were least
likely to skip lunch. - Source: National Restaurant Association, Meal Consumption Behavior [February 6, 2002]
Labor: Finding potential employees is the biggest
challenge operators expected to face in 2001, with
roughly half of the survey respondents rating it their top
challenge. - Source: National Restaurant Association,
Quickservice Restaurant Trends [February 5, 2002]
Dinner:
Nearly all individuals consume at least one privately prepared dinner per week and three-quarters did
so at least five times per week. - Source: National
Restaurant Association, Meal Consumption Behavior [February 4, 2002]
Restaurant Employees:
The typical person working in a foodservice operation is female, under 30 years of
age, and single. - Source: National Restaurant
Association, Restaurant Industry Employee Profiles [February 3,
2002]
|
IRS issues new ruling on small wares
Jan. 24, 2002 — The Internal Revenue Service IRS earlier this month issued a ruling clarifying the
proper reporting of the cost of smallwares for
restaurants and tavern operators. Prior to this ruling, there was no clear definition of the
appropriate handling of these costs. Generally, the
recent IRS ruling provides a safe harbor method of accounting for the cost of smallwares, allowing
these items to be expensed in the year they are
purchased and placed in service. It is effective for tax years ending on or after Dec. 31, 2001.
The IRS has defined "smallwares" as items in one of the following 10 categories:
 | glassware and paper or plastic |
| cups |
| bar supplies |
| flatware and plastic utensils |
| food preparation utensils and tools |
| dishes and paper or plastic plates |
| storage supplies |
| pots and pans |
| service items |
| table top items |
| small appliances that
cost $500 or less |
|
The Restaurant Industry Dollar,
Where It Came From; Where It Went
|
Full Service |
Limited Service |
| Food Sales |
$.75 |
$.95 |
| Beverage Sales |
$.25 |
$.05 |
|
Total |
$1.00 |
$1.00 |
| Cost of Food Sold |
$.28 |
$.32 |
| Cost of Beverages Sold |
$.08 |
$.03 |
| Salaries and Wages |
$.30 |
$.28 |
| Employee Benefits |
$.05 |
$.03 |
| Restaurant Occupancy Costs |
$.06 |
$.08 |
| Other |
$.19 |
$.19 |
|
Pre-Tax Income |
$.04 |
$.07 |
Note: All figures are averages, are computed individually for each cost category, and are rounded. All amounts
are reflected as a percentage of total sales. Source:
National Restaurant Association, Restaurant Industry Operations Report - 2001.
|
More than four out of 10 responding organizations (43 percent) were family businesses with family
members working as salaried employees. Median
salaries were typically lower in family businesses than in non-family businesses, probably because
family businesses usually are smaller operations.
For example, a president/chief executive officer of a family business earned $50,000 as the median base
salary, compared with $78,000 for the same
position in a non-family business. National
Restaurant Association
An organization's scope of operations and sales volume determined compensation to a large degree.
For example, a chief operating officer earned
$50,000 as the median annual base salary for organizations operating on a local basis, compared
with $135,000 for national organizations. For
restaurant operations with an annual sales volume of less than $1 million, a chief operating officer
received $35,000 as a median base salary, far
below the $120,300 salary at organizations with annual sales of $10 million or more.
National
Restaurant Association |
| |
|
National
Restaurant Association
|
|
|
