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:
- Restaurant management tasks are spokes on the same wheel.
- High-performing restaurant managers need to be strong in all areas to keep the restaurant business on track.
- Soft tasks like building a positive staff culture are as important as hard tasks like calculating restaurant performance metrics.
Let’s dive into the six points that best illustrate how to manage a restaurant.
1. Know Your Expenses, Costs & Targets
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.
Restaurant Costs vs Expenses
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.
Costs, unlike expenses, fluctuate. This means your costs are controllable. You can control the money spent on supplies like wine, beer, food, and to-go containers (also known as your cost of goods sold or COGS). Labor is another controllable cost.
Read our guide to restaurant metrics to get a deeper understanding of restaurant costs.
Common Restaurant Expenses & 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.
2. Adjust Your Operation to Meet Targets
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.
- Reduce expenses: Negotiating more favorable lease terms, flat-rate utility payments, and prices with vendors and shopping for the most competitive rates in insurance can reduce expenses.
- Reduce costs: Writing schedules to a budget, avoiding overtime, and avoiding break violation penalties are all ways to keep your labor costs in control. Controlling food costs can look like avoiding spoilage and spillage, deterring theft, performing regular inventory counts, or adjusting your ingredients, pricing, or portion size.
- Increase sales: As illustrated above, your cost and expense targets are all tied to your sales. Increasing sales will have the most immediate impact on meeting your targets.
- Market your restaurant: Marketing your restaurant might include building a website, creating a loyalty program, working with nonprofit organizations, advertising through social media or print, posting on social media, or collaborating with other restaurants.
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.
3. Plan for Growth
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.
Use Daily Manager Logs to Communicate
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:
- Forecasted sales for the day
- Actual sales for the day, split by food and beverage categories
- Comps and spillage dollar amounts
- Guest counts
- Check average
- Labor costs
- Notes on anything out of the ordinary: large parties, unseasonable weather, road closures, staff issues, anything that might have impacted sales
- Notes on inventory—any items where the stock is low, any items that are expected to be delivered the following day
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.
Use Manager Meetings to Identify Trends
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:
- Profit and loss statements: Many restaurants find it helpful to compare apples-to-apples by running their profit and loss reports on a seven-day week and a 28-day cycle to avoid inflated numbers for months that have more Fridays and Saturdays. An abbreviated weekly P&L review helps your team keep track of trends and make adjustments.
- Upcoming operational changes: Sometimes you need to rearrange the floor plan to accommodate additional tables for two on Valentine’s Day or close part of the restaurant for a private party. Ensure that all members of your management team are aware of these expected changes and know their roles in creating a smooth operation for the rest of the team.
- Marketing strategy: Are there upcoming seasonal events relevant to your brand? Do you have email, text, and social media campaigns to promote them? Are your previous marketing efforts paying off?
- Local partnerships and philanthropy: Partnering with local brands is a great way to foster a sense of community in your restaurant. So are things like sponsoring a local Little League team. Nonprofit fundraisers for Alex’s Lemonade Stand or No Kid Hungry are great places to collaborate with other restaurants in your market.
- Forecast future sales and cost targets: All manager meetings should include reviewing the sales and business forecast for the upcoming week or month. Meetings should end with strategies to maintain targets and increase sales for the week ahead.
Create Forecasts
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.
4. Build a Positive Staff Culture
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:
- A staff training program: No restaurant operation is too small for a training program. If you’re unsure how to put one together, start by considering each role in the restaurant and writing out what a typical workday looks like for them. From these notes, you can create a simple checklist to ensure you—or one of your star staff members—walk new hires through every necessary task.
- Ongoing training opportunities: Training is not a one-time job. A good training program is continuous. The most straightforward way to include daily training is to hold a staff meeting at the beginning of each shift.
- Meaningful incentives: Several recent surveys of restaurant workers offer a clear view of what employees want from their restaurant jobs. They want livable wages, advance notice of their schedules, recognition of their efforts, and benefits like employee discounts and paid time off.
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.
5. Monitor Standards Daily
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.
Download Restaurant Manager Daily Walk-through Checklist
There are a few standards for a restaurant manager to keep in mind when walking through the restaurant:
- Local health code: The .gov website for your local Department of Health will have all the information about local codes. A good daily baseline is to check that all of your handwash sinks have hot running water, soap, and hand towels and that your refrigerators and freezers are cooling to the correct temperature.
- Local fire code: Your local Division of Fire Safety will have guidelines specific to your area. Generally, you want to be sure that your smoke alarms are unblocked and in working order, fire extinguishers are stocked in designated locations, and that all of your emergency exit routes are clear of debris.
- Labor code: Specific labor codes vary by location. Some states require employers to compensate staff for “on-call” shifts, others designate a minimum of 12 hours between the end of one shift and the beginning of another. Look at your staffing plan at the beginning of every shift. Scan for potential overtime, break penalties, or rest time violations. If you have any staff scheduled as “on-call,” either bring them in or release them as soon as possible.
- Restaurant standard operating procedures (SOPs): These are the standards that your ownership and management team set for your particular restaurant. These ensure that the dining room is set to specific standards, the server stations are stocked with the items you require, and the kitchen stations, bars, and storage areas are set up correctly.
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:
- Hiring restaurant staff
- Writing staff schedules
- Holding staff meetings
- Monitoring staff tips and tip distribution
- Ordering supplies
- Negotiating prices with suppliers
- Scheduling equipment maintenance
- Renewing permits and licenses
- Writing social media posts and advertisements
- Designing menus
- Handling private party bookings
- Counting inventory
- Health and safety audits
- Handling customer complaints
- Cashing out servers and bartenders
- Building banks and balancing tills
- Compiling end-of-shift and end-of-day reports
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.
6. Focus on Customer Service
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.
- Maintaining a sanitary environment: Customers are more aware of cleanliness and sanitation standards now than ever before. Restaurant managers need to ensure that all areas of their operation are clean and sanitary for customers and staff.
- Maintaining safety standards: Maintaining clear walkways throughout your restaurant, ensuring that water, electrical, and other systems work properly, and maintaining slip-proof, accessible entrances keep your restaurant safe for customers and staff alike.
- Setting service standards: Setting guidelines for the length of acceptable wait times and establishing procedures for beverage service, napkin folds, table settings, takeout packaging, and staff uniforms are the foundation of your in-person customer experience.
- Communicating with guests: Guests have questions about everything from where to park to how to book rehearsal dinners. Restaurant managers need to be able to handle any customer inquiry and train their staff to field basic questions, too.
- Responding to customer feedback: Customers have things to say, in-person and online, both positive and negative. Restaurant managers need to listen to it all and respond with grace and good judgment.
Read our guide to handling customer complaints for tips and suggested scripts.
What Good Restaurant Management Looks Like
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:
- Is present in the dining room: Make it a priority to interact with every guest that is in the restaurant or “touch tables.” A good table touch is short and polite and opens the door for guests to speak up about their experience without being intrusive.
- Is available to the staff: Restaurant management requires a willingness to help where needed. If the kitchen is busy with orders, the restaurant manager may step in to expedite the food. If the bar is getting overwhelmed the manager might pour beer and wine orders so the bartenders are free to focus on cocktails.
- Addresses service errors personally: As a restaurant manager, fixing problems in the moment can stop a service mistake from becoming a full-blown bad experience.
- Knows when to comp and void items: To keep your costs in line and keep your inventory accurate, any food or beverage that is prepared should always be a “comp” in your POS. The only items that should be voided are items that were not made.
- Uses comps judiciously (and carefully): The profit margins on liquor are much higher than food products, so it makes sense from a cost perspective to send a complimentary round of cocktails to a group that has had a negative experience. In some states, however, it is illegal to give away alcohol. Be sure to check your local liquor laws before you comp alcohol.
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:
- Complete daily shift log: A detailed report at the moment will be most helpful for reviewing during the manager’s meetings. Consistent logging will help you see trends, which will allow you to better serve your customers’ and staff’s needs.
- Check social media and review sites: Many customers prefer to communicate with a restaurant through social media. Customers also frequently leave reviews in the evenings. Take the time to check your restaurant’s social media channels and popular review sites, so you can quickly respond to any new comments or reviews.
- Coach staff: Check in with all staff members who were involved in negative customer experiences during the shift. Provide training and coaching to help them improve. Listen to their side of the experience, and ensure they feel heard.
- Check sidework completion: Many restaurant managers perform the same walk-through at the end of their shift as they did at the beginning to ensure the restaurant is well and completely closed, with all end-of-shift tasks (also called “sidework”) completed. A strong close helps ensure that your opening staff members working the following shift can get a good start rather than being tied up with stocking and cleaning tasks that should have been done during the previous shift.
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 Management Challenges
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.
Restaurant Management Benefits
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 Benefits
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.
FAQs
Restaurant management varies a lot based on your restaurant type. These are the most common questions I hear from new and aspiring restaurant managers.
Last Bite
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.
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