Focus on Finance: Aiming for Restaurant Success
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[Excerpt] We all know that the most important thing about a restaurant—the thing that stands out and shapes a guest's experience—is the food. Not only that, but we can name other elements that are crucial to the guest's restaurant experience, including staff, service, location, ambience and decor, menu, and overall execution. But restaurants can survive weaknesses in all those areas and still remain in business. We've all seen those places. What a restaurant cannot survive is failure of financial management, including focusing on revenue, profit, expenses, debt, and appropriate staffing levels. It's true that restaurants fail due to market factors or even due to a lack of expertise, but as we see it, the financial side of the restaurant business doesn't get the attention it deserves. For this reason, in this chapter we explain the specific connection between the elements of food-service management and the income statement and balance sheet. Our goal is to focus on restaurant success factors by discussing these two important documents, and the many operational elements that go into them. Let's start with the income statement.
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Cornell University School of Hotel Administration; hospitality management; finance; finance management; restaurant operation; income statement; balance sheet; inventory management
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Required Publisher Statement: © Wiley. Final version published as: Susskind, A. M., & Spies, R. (2011). Focus on finance: Aiming for restaurant success. In M. C. Sturman, J. B. Corgel, & R. Verma (Eds.), The Cornell School of Hotel Administration on hospitality: Cutting edge thinking and practice (pp. 227-243). New York, NY: Wiley. Reprinted with permission. All rights reserved.