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Restaurant expenses include labor costs, cost of goods, operating expenses, and occupancy costs such as rent, utilities, and insurance. Managing inventory and controlling labor costs are key to keeping expenses low. Start-up expenses include kitchen equipment and office supplies.
Common restaurant expenses include payment of employee salaries, the cost of ingredients, maintenance expenses, and advertising and marketing expenses. Other restaurant expenses often include the cost of starting the business, such as decorating the restaurant building, paying the fees required to set up the business, and license fees if the restaurant is a franchise. A restaurant must also pay a mortgage or rent to stay in its building and the costs of utilities.
Restaurant expenses include the cost of labor, including employee salaries, as well as applicable taxes. If a restaurant offers employee benefits, that’s another expense to consider. The cost of labor is usually an expense that the restaurant can keep under control and manage. For example, if a restaurant owner needs to keep costs down, he can only schedule one server per shift instead of two, or he can choose not to offer benefits to each employee.
The cost of goods like food and beverages is another major restaurant expense. The restaurant needs to know how much it spends on ingredients so it can price its entrees and other menu items correctly. Managing inventory is key to keeping restaurant expenses low. A restaurateur must know how much to order so that the restaurant does not run out of products during a shift and to ensure that ingredients will be used in a timely manner and not wasted.
In addition to the cost of food products, a restaurant must account for operating expenses, such as the cost of dishes and utensils, as well as pots and pans for use in the kitchen. Start-up expenses typically include the cost of a stove and oven, refrigerators, and freezers in the kitchen. Office supplies, such as a computer, printer, and telephone, should also be included in a restaurant’s operating expenses.
Rent, utilities, and insurance are other common restaurant expenses and are known as occupancy costs. While some of these expenses, like rent or a mortgage, are fixed from month to month, others, like your electric or gas bill, can fluctuate depending on the season and the amount of time the restaurant is open. Occasional expenses, such as the cost of repairs and maintenance of restaurant property, are also generally included in occupancy costs, as are property taxes, sewage, water use, and the cost of waste disposal.
Smart Asset.
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