Get that manager a financial statement!!
Thursday, October 23rd, 2008So your restaurant manager is rocking the place, as the kids like to say. Food costs are down, labor costs are in check, the rats are mostly at bay, and the customers are fat, tipping, and happy. Then comes the request: “Uh, boss, can you show me the financial statements so I can get a sense of how ‘Pig Feet - Who Knew They Were Delicious?!’ is doing this period?”
The sweat beads are forming on your temple. You don’t want to show Mr./Ms. General Manager, despite your overwhelming trust, to look at all aspects of the profit and loss statement. You don’t particularly want him to know how much you pay in rent, what your utility costs are, let alone how many bags of Sour Patch Skittles you bought and hid in the ‘back room supplies’ accounting category (just kidding - especially if you’re an IRS agent reading this).
There are a lot of reasons to not show a non-equity individual, even one as involved as the operations manager, all financial aspects of your restaurant. Most pointedly, it’s none of their business. As the owner, you are the one who took the risk to open your doors. You are under no obligation to share a significant component of your financial doings with the manager. Would you show him your income tax return? Your 401K statement? Of course not. So there is no need to feel you owe him a complete glimpse of the restaurant’s operational activities. It fosters envy and perhaps even an effort by the manager to think she can go out and duplicate your efforts at a new location of her making.
So how to handle the reasonable request to let them know if they are hitting their numbers in the important categories? Why a tailor-made profit and loss statement, of course. In my world of restaurant accounting, it’s usually called a ‘controllable profit and loss statement’. Which is just a fancy-schmancy way of including only those categories over which the manager has control. Food and labor costs are the main two items. You could also include repair costs, office supplies, uniforms and laundry, and even utilities, where the manager has significant say over how long a gas-powered grill is run, for instance.
Prepare one every accounting period for him. Review it together. It’ll be a bonding moment (-”Hey, why the he$# is the ‘latex gloves’ expense up $225 this period?”- -‘;Um, balloon night?’-). It’s the carrot to help motivate the manager to keep costs under control. And that’s just another way to bring more profit to the bottom line.
