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This One Tool Actually Helps You Balance Your Restaurant Budget

Posted by AJ Beltis on 7/26/17 1:00 PM in Restaurant Metrics

5 minute read Print

restaurant budget

You set a clear budget - for marketing, for emergencies, for equipment, etc. And you think it's perfectly reasonable.

Then, a few months later, you look at your bank account and find yourself wondering where all your business's money went.

Like in everyday life, it's so easy for restaurant owners to spend just a *little* bit too much when they're supposed to stick to a budget. For example:

  • Minimum wage increases mean your budget for labor must increase. 
  • Incremental costs of pay-per-click ads on Google and Facebook add up the cost of your marketing expenses.
  • Failing technology and long support calls mean your allotted budget for tech is more than always. 

That's why we've drafted up this Restaurant Budget Variance Template, so restaurant owners and managers can compare a planned budget to an actual budget and keep costs in control. 

Click Here to Download Your Restaurant Budget Template

Below, we go over some of the key areas restaurateurs tend to overspend compared to their projections (all of which are covered in the interactive template), as well as some suggestions for keeping your budget in check moving forward.

Restaurant Marketing Budget

According to a new report from TripAdvisor, 85% of U.S. restaurants believe they should be doing more marketing than they usually do. Additionally, 84% of restaurants plan on spending the same or more of their previous year's restaurant marketing budget, according to data collected by Toast

In past years, businesses could allocate their marketing budget easily - flat rates for print ads and media placement made it simple to track and control spending.

Now, times are different. With the bulk of modern restaurants now advertising on search engines and social media, spending is completely contingent on how many people click a sponsored post. 

To keep your restaurant marketing budget in sync with projections, keep the following in mind:

  • Remember to set reasonable daily limits for your online advertising spend.
  • Monitor your online ad performance regularly.
  • Research what other restaurants spend for keyword/social media advertising.
  • Compare the performance of online ads, print ads, and other marketing material to see which should be invested in.

Restaurant Equipment & Repair Budget

If you've opened a restaurant, you know the cost of equipment well. The oven, the walk-in, the counters, the sinks, the other oven, the dishwasher...the whole shebang. 

As your restaurant ages and (hopefully) advances, you'll need to invest money into equipment repairs or even brand new equipment. Terms like "depreciation" and "return on investment" may not be your favorite to use, but they're essential in restaurant budgeting. 

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Click here to download this free tool.

It's not as simple to allocate funds for equipment and repairs since an issue can come up without warning. When I worked in a pizzeria, the oven shut down on a Friday night during Lent - not exactly the ideal situation. 

Help control your restaurant's equipment and repair budget with some of these tips:

  • Factor in depreciation and reasonable equipment lifespans so you can be prepared to buy new material when needed.
  • Contact local repair companies to get estimates for worst-case-scenario, last-minute repairs.
  • Buy supplies from reputable suppliers and check equipment reviews.

Restaurant Technology Budget

Restaurant technology - you can't work with it, you can't work without it. 

But more importantly, you can't work without it. 

Restaurant tech is an investment, but if you choose the right restaurant POS system, it pays for itself. Still, it does require that initial investment. Plus, if you choose the wrong POS, you could end up spending even more in hidden fees, replacement terminals, and service repairs. 

To set and keep a reasonable budget for your restaurant technology, try adhering to the following:

  • Do your research! Check sites like Merchant Maverick and Capterra before buying restaurant technology. 
  • Ditch the legacy system - aren't you tired of putting more and more money into a failing system?
  • Ignore the sunk cost. What's done is done, so if a system is losing you money, it probably will continue to do so. 

Restaurant Theft, Damages, and Legal Emergency Budget

Any guess how much is employee theft is estimated at for the restaurant industry?

Believe it or not, it could be as high as $6 billion. This includes everything from free meals to blatant register skimming.

Not to mention, imminent data threats have impacted restaurant like Chipotle and Wendy's, meaning the chances for theft have not exactly diminished. Restaurants may also be forced to spend hefty legal fees if someone slips, chokes, burns themselves in the kitchen, has an allergy attack...you get the picture.  

Long story short, you could either lose or be forced to front massive funds in the wake of thefts, legal fees, or property/equipment damages.

To reduce the impact of this setback should it occur, keep this in mind. 

  • Make sure you are putting a fixed amount of revenue into an emergency savings account for just-in-case situations. 
  • Adhere to all safety laws and guidelines regarding food storage, employee safety, and allergen warnings. 

Restaurant Inspection & Services Budget

"Oh wait...that expires this year?"

"Come on...another certification to get?"

Handling the food of the countless individuals who come into your restaurant is a big deal. Thus, you need certifications and inspections to show you are qualified to do this. As you know, this costs money. 

Additionally, you're running a business. This doesn't mean you're an expert in accounting, taxation, and/or the law. This is why it's very common for restaurateurs to outsource their accounting and legal work. This, too, costs money.

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Click here to download this free tool.

To avoid going overboard on spending here, adhere to these best practices:

  • Keep a record of required inspections/certifications you need, when they expire, and the cost. 
  • Get quotes from accountants and lawyers up front for reasonable forecasting. 
  • Allot an additional amount of funds in case you need extra work from professionals or consultants. 

Restaurant Employee Wages Budget

Bringing more workers on to a shift is usually a good thing. It means you have the demand for more help, and that's only justified when you have a busy shift ahead of you. However, this bump in business can seemingly come back to haunt you when you notice your labor budget is above your projections.

When a higher labor budget is a result of more business, this is a good thing. However, if it's due to an increase in minimum wage or another circumstance beyond your control, this isn't always preferable to restaurant owners. 

To control your wage budget, plan for the following:

  • Increases in minimum wage by keeping track of when - and by how much - the hike will be.
  • Allotting for the tip credit if your restaurant needs to make up the difference. 

Controlling Your Restaurant Budget

With so many variable components to restaurant expenses, controlling a restaurant budget is not always easy. That's why tools like Toast's Restaurant Budget Variance Template make it easy for you to track business expenses yourself and keep a record of how in check you are with your finances. 

The template can be used by new restaurateurs trying to plan a reasonable budget and by veteran restaurateurs to compare allotted funds to actual spend. 

Never go over-budget again - download the Restaurant Budget Variance Template for free below!

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Written by: AJ Beltis

AJ Beltis is a Content Marketing Specialist at Toast. After working at a pizzeria throughout high school and college, AJ now manages the Toast Blog and hosts The Garnish Podcast. When he's not writing, he's probably out running in Boston's South End or watching one of his favorite movies for the 30th time. He loves to travel and experience all the different kinds of toast the world has to offer.


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