Restaurant management is all the tasks and daily decision-making that running a restaurant requires. Restaurant management tasks fall into two main categories: managing the health of the business and directing daily operations. The first three points on this list—knowing costs, adjusting to meet targets, and forecasting for growth—fall under managing the business’s health. The final […]
Restaurant management is all the tasks and daily decision-making that running a restaurant requires. Restaurant management tasks fall into two main categories: managing the health of the business and directing daily operations.
The first three points on this list—knowing costs, adjusting to meet targets, and forecasting for growth—fall under managing the business’s health. The final three—maintaining operational standards, building a positive staff culture, and focusing on customer service—are part of directing daily operations.
Key Takeaways:
Let’s dive into the six points that best illustrate how to manage a restaurant.
Let’s start with the part that restaurant managers may find tricky: the math. Managing a restaurant of any size begins with knowing your operational costs and expenses.
Costs, in particular, show the health of a restaurant more accurately than any other measure. Knowing how to figure these numbers is important and doesn’t need to be difficult. To begin, it is important to know the difference between expenses and costs.
Expenses are payments that don’t fluctuate and must be paid regularly. Business and liquor licenses are expenses. Rent and utilities are, too. It’s important to know your expenses as they may affect your long-term decision-making, but your ability to control them on a daily basis is limited. Most of your expenses are the result of deals made at the restaurant’s launch or negotiated and renewed annually.
Read our guide to restaurant metrics to get a deeper understanding of restaurant costs.
Figuring your expenses happens once when you start your business and arrange contracts. Your rent or mortgage payment will be a major recurring expense, as will your utility bills for water, electricity, and fuel.
Figuring costs is something you’ll do monthly, weekly, or, sometimes, daily, depending on the cost type and your operational goals. Expand the sections below for a brief overview of how to figure labor and food costs.
Good restaurant managers figure their labor cost daily—sometimes multiple times a day if your restaurant operates for multiple day parts (restaurant speak for “meal times”). Figuring labor cost daily helps you identify times when you need to adjust staffing levels or increase sales to reach your targets. Figuring labor cost also helps you stay on budget when writing staff schedules.
Here’s the basic formula for labor cost:
(Total Labor Cost $ ÷ Total Sales $) × 100 = Restaurant Labor Cost %
Read more about figuring labor costs and applying those calculations in our guide to figuring labor cost. The guide contains a free downloadable labor cost template to speed up your process.
There are two types of food cost to keep in mind: per-item (or per-plate) food cost and overall food cost. Restaurant managers should know how to figure both, as each number is useful in different ways.
For example, per-item food cost is the best foundation to set your menu pricing. Overall food cost gives you a more accurate idea of your restaurant’s overall profit margins.
To figure your per-item food cost, you need to add the cost of each ingredient in a single dish and compare that to your menu price. This will give you a percentage, and that percentage is your per-plate food cost.
In the example above, adding all the costs of a dish gives you the per-item food cost of a cheeseburger meal. The per-item food cost informs the menu price and helps ensure that you hit your overall food cost percentage targets for your restaurant.
Overall food cost is tied to your cost of goods sold (COGS)—a number you generate anytime you count inventory. So you’ll figure overall food cost at the same cadence you count inventory, usually weekly or monthly.
The formula for calculating overall food cost is:
(COGS / Food Sales × 100) = Food Cost
And this is the formula for calculating your COGS.
(Opening Inventory + Purchases – Closing Inventory) = COGS
Learn more about the different types of food costs and how to use them to manage your restaurant in our full guide to food cost, which includes a free downloadable calculator.
Your targets are, essentially, what percentage of your total revenue you can afford to spend on supplies and labor while still turning a profit. Restaurant targets are typically expressed as a percentage of sales. As in, “food cost is 25%” or “profit margin is 5%.” Those percentages are percentages of your sales.
Every restaurant is different, so your targets may veer from the industry standard targets illustrated in the image below: 30% food cost, 30% labor cost, 30% expenses, and 10% profit. Food and labor costs vary widely, so it is also common to refer to your combined food and labor costs as prime costs. Most restaurants aim for a prime cost of 60% or less.
A restaurant’s targets should be set to allow at least some revenue to flow through to your bottom line as profit. As this chart illustrates, your restaurant costs and expenses are all connected. Both are connected to your sales as well. Most of a restaurant manager’s regular tasks are related to tracking and influencing these connections to grow profit. We’ll discuss this in the next step.
Closely monitoring your expenses and costs, and then finding ways to reduce them—while supporting your restaurant’s business volume—will be your most common restaurant management work.
These are some common ways to adjust your restaurant operations to meet your targets.
Much of the work of managing a restaurant is controlling costs on a daily, weekly, and monthly basis to keep your restaurant operating within your target ranges. You may not hit your targets every day; the work of restaurant management is doing everything you can to get as close as possible.
For more ideas on how to adjust your operation to meet your targets, check out our guide to menu development, tips for increasing restaurant sales, and our step-by-step guide to restaurant marketing.
So, you’ve figured out all of your food and labor costs. You’ve done inventories and written schedules. You have spreadsheets on spreadsheets. Now it’s time to apply those numbers to meet the challenges ahead.
Well-run restaurants with an eye on profitability complete a daily shift log to share with owners, chefs, and other managers. If there are multiple managers throughout the day—one manager during the day and one at night, for example—each manager completes the portion of the log that corresponds with their shift. These reports become the building blocks for weekly, monthly, and annual manager meetings.
A daily shift log shared across managers and owners in the front and back of house should include:
Beyond the dry facts and figures, a daily report should also look for opportunities to celebrate milestones. Did the team exceed the sales goal for the day? Did the kitchen have excellent ticket times? Were several of the day’s customers responding to the ad you placed with a nearby theater?
Look also for opportunities to improve. Are customers confused by the menu description of a new dish? Is there a draft by the front door? Finish by including any information that will be relevant for the next shift. This could be a reminder that two servers have swapped their shifts or the suggestion that the patio furniture be covered when the forecast calls for rain.
Weekly and monthly manager meetings should survey the daily reports alongside profit and loss statements (P&L) to identify trends in the restaurant. A regular management team meeting, even if it is only two people, is the best time to make plans and set goals for the upcoming weeks and months ahead.
In these meetings, teams should review:
Forecasting is looking at your past sales, guest counts, and labor costs to find patterns that might apply in the future. You might notice that on the previous four Saturday nights, you sold 50 pork chop entrees. So, you’ll want to be sure to have enough meat delivered on future Fridays to maintain that momentum.
Your previous scheduling reports might show that you have the most requests off on Sundays. If your restaurant is busy on Sundays, you should be sure that any new hires have availability to work Sundays.
Like many processes in restaurant management, forecasting can be done in more complex ways. The more complex the forecast, the more useful information it can give you. If the concept of forecasting seems daunting, you can start small. Look at your sales and labor from the previous week and use that information to inform choices in the week ahead. Once you feel comfortable with that data, use previous weeks’ invoices to predict future ordering needs. Then expand backward; start looking at the previous year’s patterns to forecast the weeks and months ahead.
Forecasting is a tool utilized by all major restaurant and hospitality groups. Small restaurants might think that they lack the resources to create accurate forecasts or that their operation is too small for forecasts to matter. Forecasting, however, is a key to planning ahead for major purchases and growing your operation. Read our complete guide to restaurant forecasting for step-by-step instructions.
Good restaurant management must include staff retention strategies like supporting the staff you have and giving them the tools they need to be successful, including a comprehensive training program, health benefits, flexible scheduling software, or dining discounts and paid time off.
Ways to build a positive staff culture include:
Regardless of your restaurant type one of the best ways to contribute to a positive workplace culture is to share successes with the entire staff. After a busy season, like a summer tourist season or the holidays, set aside time to celebrate your wins with the entire staff. A slow Sunday or Monday night is a good choice. Close the restaurant for the evening, bring in some snacks, and show your team that you saw and appreciated their work through the busy times.
Managing a restaurant is a daily challenge. High-performing restaurant managers begin each shift with a full walk-through of the restaurant. Restaurant space is constantly in use, so a comprehensive daily walk-through from the kitchen to the front door is the best way to catch small things before they become a customer service issue or lower your health department rating. This could be anything from refrigerators struggling to stay cool or burnt-out lightbulbs in the dining room.
Here is a downloadable checklist of some key things a restaurant manager should check every day. You can update it with your local health codes and personal SOPs where necessary. Managers usually find that after several weeks of following a checklist like this, the checks become like a reflex.
There are a few standards for a restaurant manager to keep in mind when walking through the restaurant:
Besides looking at refrigerator temperatures and fire exits, a daily walk-through is also a great opportunity to greet each of the team members you will be working with that day. This can be a great foundation for maintaining a positive team environment, which leads to the next step. There are other tasks you’ll perform on a daily basis.
Depending on the time of year and your restaurant style, they might include:
For step-by-step advice and tips, read our guide to hiring restaurant staff, guide to restaurant suppliers, and guide to tip outs and tip sharing methods.
Your staff are not the only people who regularly require a restaurant manager’s attention. There are customers to consider. Most every task in restaurant management can be tied to customer service. Keeping the space clean and safe and your staff trained and motivated and ensuring that all of your operational systems are in top working order and that you have enough inventory on hand to meet guest expectations are all part of creating an excellent guest experience.
Read our guide to handling customer complaints for tips and suggested scripts.
Good restaurant management is organized, active, and efficient. A good restaurant manager is constantly present to staff, customers, and vendors. A typical restaurant management day breaks down into tasks you’ll perform while the restaurant is open for business and management tasks you’ll perform when the restaurant is closed to the public.
When the restaurant is in service, an effective restaurant manager:
When the restaurant is closed, restaurant managers must tie up the loose ends of service. After the guests have left the restaurant, a restaurant manager should:
Mistakes and miscommunications will happen in every shift. It is important for a restaurant manager to take the time to learn from them and adjust the operation in response. The best way to do this is by taking the time at the end of every shift to “button up” the operation. Take note of things that worked and things that didn’t.
Restaurant managers have dozens of tasks to perform on a daily, weekly, and monthly basis. It can be a high-intensity job. There are a few restaurant management challenges that owners and managers should know.
Restaurants are frequently influenced by forces outside of their control. Food shortages and supply chain issues frequently affect restaurant’s access to ingredients. In the early 2000s, restaurants had to deal with the new influence of online reviews overnight. In 2020, the global pandemic shut down operations, and the industry shifted completely to online ordering and third-party delivery, a disruption that is still having ripple effects.
Industry change is common, and in recent years, the pace of change in the restaurant industry has reached incredible speeds. Disruption from outside the industry can derail all your forecasts and best-laid plans for your restaurant’s success. Disruption is a major restaurant management challenge. The best thing you can do to prepare for disruption is to keep an eye on industry news through publications you trust.
Restaurant chefs and managers work hard, long hours. They constantly navigate between the shifting needs of restaurant ownership, staff, and customers. And they need to do it all while maintaining grace under pressure. Over time, the emotional labor and the long hours can take a toll. Restaurant managers experience a high level of burnout. I have seen it and experienced it firsthand.
Restaurant managers should develop self-awareness and be on guard for the signs of burnout in themselves and their employees. Buld rest and downtime into your schedule when you can. And remember to hydrate.
If you are struggling with burnout in yourself or your staff, read our guide to managing restaurant burnout for tips to help.
Restaurant management is all about metrics. But restaurants are also a people business. It is very easy for restaurant managers to over-emphasize metrics in a way that alienates staff and customers. Metrics are important. But when you’re making management decisions based on metrics, remember the human element.
For example, if you’re over budget on labor costs, you might decide to schedule a server for split shifts like 11 a.m. to 2 p.m. and 5 p.m. to 9 p.m. on the same day. You might have staff on your schedule for your busiest times, but you’re also essentially forcing your team to be available for 10 hours of their day. So while the metrics work out, you’ll have a hard time retaining employees with that schedule.
Which brings me to the next challenge—negative restaurant culture. Restaurant managers have a huge impact on their restaurant’s workplace culture. A negative restaurant culture can easily emerge if you neglect the human elements of the business.
Yes, work has to happen, you need to get the food sold before it spoils, and you need to turn a profit. You also need to maintain—at a minimum—a professional atmosphere. Ideally, you’ll create a positive culture where your staff supports one another.
Restaurant management, when done correctly, ensures your restaurant runs smoothly and profitably. And while it can be stressful, restaurant management can also be fun and rewarding.
There is a pattern to most services. Business lulls and rushes tend to happen at similar times from day to day. The system of ordering, selling, and counting stock is straightforward. The process of hiring and training new employees can be similarly straightforward if you are organized.
After some time managing restaurants, you’ll develop a network of other hospitality workers, and you’ll rarely pay full price at another restaurant when you dine out. You’ll also find it easy to intensely focus on the work in front of you and “get in the zone” during a service. I have always found those moments incredibly rewarding, which is why I managed restaurants for more than a decade.
Restaurant management, when done correctly, ensures your restaurant runs smoothly and profitably. And while it can be stressful, restaurant management can also be fun and rewarding.
There is a pattern to most services. Business lulls and rushes tend to happen at similar times from day to day. The system of ordering, selling, and counting stock is straightforward. The process of hiring and training new employees can be similarly straightforward if you are organized.
After some time managing restaurants, you’ll develop a network of other hospitality workers, and you’ll rarely pay full price at another restaurant when you dine out. You’ll also find it easy to intensely focus on the work in front of you and “get in the zone” during a service. I have always found those moments incredibly rewarding, which is why I managed restaurants for more than a decade.
Restaurant management varies a lot based on your restaurant type. These are the most common questions I hear from new and aspiring restaurant managers.
A restaurant manager hires, trains, and supervises service staff, manages food and labor costs, grows restaurant sales, and handles guest issues. Depending on the restaurant type, the manager may also be responsible for developing a beverage program or managing catering and special event contracts.
Good restaurant managers are constantly learning. They stay abreast of industry trends in food, beverage, technology, and people management. Good restaurant managers know every aspect of the restaurant operation and can perform every job in the restaurant. The best restaurant managers step in to assist the business where needed, whether that is designing a marketing campaign, attending a meeting of a neighborhood business committee, or washing dishes in the restaurant.
Restaurant management is not complicated, but it can be stressful. Restaurant managers must stay calm under immense pressure while making dozens of daily decisions that have an enormous impact on the business. Before pursuing a restaurant management career, you should also consider the potential strain that regularly working nights, weekends, and holidays may put on your personal life. If your friends and loved ones work traditional Monday through Friday daytime hours, you’ll rarely see them.
If you can handle those stressors, restaurant management won’t feel difficult.
You don’t need a degree to manage a restaurant. A hospitality management degree is useful if you want to rise through the management ranks in a high-profile hotel or restaurant group. But you can learn how to manage a restaurant equally well by working your way up from an entry-level restaurant position like a server, bartender, host, or busser. Many restaurant owners consider real-world experience more useful than a degree.
If you begin your restaurant management career with a management degree, it’s a good idea to spend at least a month actually working each position in the restaurant. You’ll see the challenges your staff faces in the course of a service, identify ways different roles can help one another, and earn a lot of respect in the process. I have always found that restaurant staff respect managers who have done the work more readily than managers with a degree but no real-world experience.
A successful restaurant operation has many moving parts. Learning how to manage a restaurant starts with understanding your costs, monitoring every detail that affects them, and then creating processes and training staff to ensure a high level of customer experience. With a sound operation and trained staff in place, a restaurant can grow through savvy marketing strategies.
Mary King is a veteran restaurant manager with firsthand experience in all types of operations from coffee shops to Michelin-starred restaurants. Mary spent her entire hospitality career in independent restaurants, in markets from Chicago to Los Angeles. She has spent countless hours balancing tills, writing training manuals, analyzing reports and reconciling inventories. Mary has been featured in the NY Post amongst other publications, and in podcasts such as Culinary Now where she discussed starting your first restaurant, how to leverage your community and avoiding technology traps.
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