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

September 19, 2012


In This Issue:

Tips and Things - The Best Advice I Can Give

Rules of Thumb

Restaurant Myth 

How Much Does It Cost To Open A Restaurant?



 Tips and Things

The Best Advice I Can Give

The best advice I can give any restaurant operator/owner (after they have chosen to be a restaurant/operator) is to calculate your Ideal Food Cost.

I am amazed at how many restaurant operators/owners have no idea what their Ideal Food Cost is. If failing to do the basics in a restaurant was a sin, this one be mortal.

Ideal Food Cost, also known as Theoretical Food Cost, is the cost expected for a given sales mix over a period of time, assuming proper portioning, zero waste, and proper yields.

In order to determine Ideal Food Cost you must know the the portion cost for each ingredient of each menu item. As food costs fluctuate, so will your Ideal Food Costs.

Make a concentrated effort to analyze your Ideal Food Cost. It is one of the most important tools you have to Improve You Profitability.


Thought For The Day

  An entrepreneur tends to bite off more than he/she can chew hoping they'll quickly learn how to chew it.

~ Roy Ash  

Rules of Thumb

The development of any restaurant requires a careful look at the financial projections. With that in mind, here are a few Rules of Thumb:

 Sales to Investment

(Annual Sales/Start-Up Costs)

Lease Hold Improvement - at least 1.5 to 1

Own Land & Building - at least 1 to 10

 Food Coat

Generally - 27% - 32%

However, some very successful restaurants have food costs as high as 40%

 Prime Cost

Full Service - 65% of total sales

Limited Service - 60% of total sales

 Occupancy & Rent

Rent - 6% or less of total sales

Occupancy - 10% or less of total sales.


Restaurant Myth


Garbage cans often become “a black hole” for excessive food waste, trim and preparation mistakes. Food that could and should have gone on the plate. Smart operators use clear plastic food boxes to deposit kitchen scraps and trim. Managers inspect the contents of each box at the end of each shift.


 We are offering a FREE Restaurant Start-Up Checklist. Just send us an email at Ron@RestaurantExperts.com and request your copy.

How Much Does It Cost To Open A Restaurant?

The most frequently asked question I receive is, "How Much Does it Cost to Start a Restaurant?"

The answer is.....it depends. Asking how much does it cost to start a restaurant is like asking how much does it cost to buy a house. There are many variables and options that must be selected before you can attempt to come up with the answer. For example:

  • Fast Casual or Full Service
  • Free Standing or In-Line
  • Restaurant ready space or shell condition.
  • Landlord TI?
  • Hood or grease interceptor needed?
  • Size of space 
  • Interior finishes selected (options)
  • Type of furnishings selected (tables can range from $100 to $500 each)
  • Type of kitchen equipment needed
  • Menu concept
  • Liquor License
  • Staffing

Completing a comprehensive feasibility study on a specific site or geographical location will determine the capital requirements and projected sales/profits & ROI of your concept.

For more information on this subject Click Here.


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.  

Send me an email at Ron@RestaurantExperts.com if you would like a copy of our booklet, "How to Manage a Successful Promotion." Type "Special Booklet" in the subject line. 


Visit our web site RestaurantExperts.  You can view additional tips and techniques that are regularly posted on our Profit Line Facebook page.

Click here to view our feature page on our client, Salad Republic 

Please Visit Salad Republics New Website LoveSaladRepublic.com


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

Contact us at ron@RestaurantExperts.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 ron@RestaurantExperts.com



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