Ron's Tip Jar/Insights - Published by Ron Santibanez   

January 30, 2013


In This Issue:

Tips and Things - How Much Inventory Should You Keep On Hand?

Vendor's - It's Not Just About Price

Restaurant Profitability - The Manager's Role

Restaurant Start Up -  The Process



 Tips and Things

How Much Inventory Should You Keep On Hand?

The answer to the question is simple. As little as possible.

The point is, you don’t want to convert your liquid cash to perishable food inventory if you can help it. The more frequently you get deliveries from your suppliers, the less inventory you must keep on hand.

Inventory control is basic “cash management.” Minimizing your inventory increases the liquidity of your restaurant.

Purchases should be tied directly to sales and not storage capacity or some par-stock level based on the maximum usage plus a safety factor. 

Remember…….Inventory is Cash.


Thought For The Day

Any business arrangement that is not profitable to the other person will in the end prove unprofitable to you. The bargain that yields mutual satisfaction is the only one that will be repeated.


Vendor's - It's Not Just About Price

When dealing with vendor’s the “best” price is not necessarily the “lowest” price, but rather the price that provides you with the best overall value. Value is a feeling that one has received his or her money’s worth in terms of quality, quantity, and service. Remember: You usually get what you pay for.

The disappointment and dissatisfaction you face from realizing that you have purchased an inferior product or service remains long after the brief exhilaration from having paid a cheap price. And in the case of a restaurant customer, the taste of a bad meal lingers long after the initial satisfaction of redeeming a two-for-one coupon.  

You Get What You Pay For.


Restaurant Profitability - The Manager's Role

 Restaurant profitability requires the manager to have a general understanding of the control process and operating environment of a foodservice operation, functions that generally occur in a foodservice operation, and cost relationships between the menu, level of service, labor, and technology.

Without these skills, the manager is doomed to fail.


Restaurant Start Up - The Process 

  The process of opening your own restaurant can be a daunting task. I have always told my clients that the process of opening a restaurant is just that.....a process. In the next few issue of "Ron's Tip Jar" I will explain some of the necessary steps you must take to open a Successful Restaurant and how the plan to open a restaurant comes together.

Decision to Open a Restaurant

The decision to open a restaurant is a relatively simple first step that may have been your dream for years, or the opportunity may have just presented itself and you want to seize the moment. For whatever reason, you want to develop a restaurant.

Your decision to take action initiates several other activities. You review and expand your notes on concepts, markets, menu, design, operating style, and restaurant details in general. At this time, you begin to share your ideas with trusted friends and potential partners. The energy and excitement grows. You plan a meeting to establish a plan of action.  

The Exploratory Meeting

The exploratory meeting focuses on how you are going to pursue the venture. You discuss concepts, operating style, menus, design, and other aspects of the proposed restaurant. Brainstorming is rampant. The enthusiasm and collection of ideas and activities must be organized and controlled. The development process must be managed.


Researching ideas and how other operators perform becomes a top priority. Perhaps you schedule trips to investigate successful or similar restaurants. Unfortunately, the idea of doing research is regarded as a luxury to many. A budget is established for it, and when funds become tight, it is deleted. Researching ideas and techniques must remain a high priority. The most obvious reason is that you may learn something. Secondly, you may also see how not to do things.

Research is a key element in the development process. Don't skimp on it.

Financing Plan

The financing of your project is a key component. Financing your restaurants development does not usually occur until you have:

  • A solid business plan
  • A termination plan
  • Legal documents for investors/partners
  • A legal business structure/entity
  • Procedures for managing the funds
  • Supporting budgets/documents for equipment needs

It is evident why the development process becomes complex. If funding cannot be completed before other activities are finished, and still other activities cannot begin until financing is in place, your development time schedule begins to expand and individual responsibilities increase.

Operational Plan 

The second critical document of your planning process is also comprised of several components. But you cannot start on this plan until you have completed at least the first draft of your business plan. Keep in mind that as you refine the business plan, changes may occur that will dramatically affect your operations plan.

The draft of the operational plan initiates five key activities:

  • The job descriptions of key management people
  • Staffing needs
  • Preopening plan
  • Design program
  • Menu development

Design Program

The design program is the third critical document in your planning process. The operational requirements established in the operational plan will dictate the physical components of the restaurant. Without a clear understanding of how you plan to operate and function and what spaces and amenities you require, the design team cannot design an effective space in which you can operate.

Construction Process

The construction process includes the activities from the bid/budget process through the completion of all contractual/administrative activities. Toward the end of construction, many earlier, unrelated activities start to interact. Owner-provided items such as phone systems, artwork, signage, furniture, and specialty finishes must be installed and coordinated with the general contractor. Scheduled inspections by building officials take precedence over all preopening operational activities. Coordination is critical.

Continued next week.....


 Additional Resources Now Available On Our Web Site:




You can now read todays Restaurant Business News on our website .  


Additional "Tips" are now available on "Ron's Blog."




Follow me on Twitter @ronsantibanez. I post frequent tips and suggestions to Improve Your Profitability.


We are now featuring our booklet "How To Start A Restaurant" FREE on our web site.  



Visit our web site RestaurantExperts.  You can view additional tips and techniques in addition to restaurant industry news that is regularly posted on our Profit Line Facebook page.


 We encourage you to contact us if there are specific subjects you would like to see addressed in "Ron's Tip Jar/Insights".

"Ron's Tip Jar/Insights" is a newsletter discussing issues that affect your restaurants profitability delivered by Ron Santibanez. You may also view past issues of "Ron's Tip Jar/Insights" by clicking here.

Contact us at ProfitLineConsulting@gmail.com

For information regarding our start-up and profit improvement services, call us at 866-903-5875. You may also reach me by email at RonSantibanez@gmail.com



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