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As a restaurant owner, you likely have a passion for providing customers with great food and memorable experiences. A top-notch operation comes at a cost — one that you must manage carefully with a restaurant budget. When you keep a close eye on cash flow, revenue, and expenses, it’s easier to set your business up for success in the future.
If you don’t have a background in finance, budgeting can feel overwhelming. A restaurant budget template creates a basic framework to track everything from food costs and marketing costs to income and profit. This handy spreadsheet will save time and help you set an appropriate monthly budget. It will also help you keep track of your business’ accounting throughout the year.
Need some help getting started with restaurant budgeting? Let’s explore everything your template should include.
Types of restaurant budgets
The first step in building a restaurant budget template is deciding what type of budget you need. Common options include:
- Operating budget. This type of restaurant budget estimates all your income and expenses for a specific period of time. In addition to revenue, it should include variable costs, fixed expenses, operational costs, and labor costs; it’s also a good idea to list factors such as depreciation of kitchen equipment and taxes. Typically, you create an operating budget before the period begins — then, you can refer to it as you set shorter-term budgets and make financial decisions.
- Capital budget. A capital budget helps you determine whether an investment or large project will be financially feasible. It compares the expected cash outflow for the project against its potential cash inflows to see if your business will see an adequate return. You might use this type of budget to evaluate a major construction project or the purchase of a new restaurant business property.
- Cash flow budget. As you might guess, this budget plan helps you project the money that’s entering and leaving your business during a set period of time — usually, a week or a month. It helps you verify that your income is keeping pace with costs and that you have an adequate cash balance on hand to cover restaurant expenses. This type of budget is helpful in setting short-term spending targets.
- Sales and revenue budget. A sales and revenue budget plan estimates how much money your restaurant business will bring in during a month, quarter, or year. It’s a realistic revenue projection based on actual sales data; you can use it as a benchmark throughout the period. If spending starts to outstrip your estimated revenue, it’s an indication that you need to boost sales or cut costs.
- Expense budget. When making an expense budget, you estimate the total expenditures your company will have throughout a given period. Then, you can factor that amount into your spending plan to avoid shortfalls.
Creating a restaurant budget: step-by-step guide
Before you create a budget, make a simple restaurant budget template. It doesn’t have to be complicated; you can make it in spreadsheet programs such as Google Sheets or Microsoft Excel. Along the Y axis, create a row for each category of expenses and revenue. Categories will vary by restaurant but typically include food sales, alcohol sales, rent, food costs, operating costs, and labor costs.
The X-axis of your restaurant budget should include three main categories: budget, actual, and the difference between the two. The first column contains your projected sales figures or budgeted costs, and the second column records how much money the restaurant business actually makes or spends. The third column expresses the difference in numerical or percentage form; it helps you gauge performance at a glance.
Once you have a budget template, you can start creating a budget plan for your restaurant.
- Categorize restaurant expenses. Start with major yearly and monthly costs, including rent, labor, taxes, insurance, food cost, beverages, and utilities. Then, dive deeper with categories including live music, marketing expenses, advertising, maintenance, administration, depreciation, and employee benefits. When in doubt, scan through your financial statements and accounting software to locate other common costs. Add each category to a row in your budget template.
- Identify revenue streams. Examine your operations and income statements and add all the revenue streams in the budget template. In addition to food and beverage sales, you might make money from catering, event admission, gift cards, and T-shirts.
- Project costs and revenue. Go through current and historical data to estimate how much you’ll spend on each of your expense categories for the given period. Record these numbers in the “budget” column on your restaurant budget template. Then, add sales projections for each revenue category.
- Analyze sales and costs. At this point, it’s a good idea to compare your projected sales to anticipated expenses. Are you making more money than you’re spending? Are certain categories losing money? Is your gross profit margin falling short? If so, it might be time to revisit that part of your operations or revamp the business plan.
- Make necessary adjustments. A restaurant budget spreadsheet is a living document — nothing is set in stone. Go through the budget template and adjust up or down as needed. If you see that your current return on ad spend is lower than expected, for example, consider moving to a different platform or reducing your expenses. If you run multiple restaurants, you will need to account for spending at each location. Don’t forget to check the local calendar for events that could impact your business. If your city is hosting a new event down the street from your restaurant, you may need to increase the food cost and alcohol budget to accommodate a surge in foot traffic.
Once you create a budget, remember to update it regularly and monitor net profit. The more exposure you have to restaurant finances, the easier it is to spot opportunities and operational inefficiencies.
More tips and tricks from Grubhub
When you use a restaurant budget template to track your establishment’s finances, you can eliminate guesswork and make smarter financial decisions. Over time, the budgeting process can help you build a more profitable and sustainable restaurant industry business.Interested in more helpful resources for managing a successful restaurant? Grubhub for Restaurants offers a wealth of tips, tricks, and tools for business owners. In addition to best practices and up-to-date information, the Grubhub platform can help you manage your restaurant’s marketing budget and maximize revenue. If you’re ready to get started, try Grubhub free for 30 days.