Restaurants generally have fixed expenses, variable expenses that respond to sales activity, and seemingly unpredictable maintenance and repair expenses. Making a budget helps you expect the unexpected, and takes the edge off of the “undpredictable” surprises.
You can budget successfully for all costs, however, by understanding industry averages and using preventive maintenance to reduce repair and replacement bills.
Create a Maintenance Schedule and Emergency Fund
Maintenance and repair costs apply to everything a restaurant owns or leases. This includes things like: kitchen equipment, furniture, company vehicles, flooring and HVAC.
When it comes to restaurant equipment, the old adage holds true, “An ounce of prevention is worth a pound of cure.” Preventive maintenance costs less than repairing or replacing equipment, and your costs for routine service are more predictable.
For example, A dirty ice machine can cost a business more than customers. When the ice maker is dirty, the ice production slows down and energy-efficiency is lost. This leads to higher energy costs and replacement ice expenses.
Neglecting a bread steamer allows scale to accumulate that could disable the machine.
Refrigeration malfunctions put inventory at risk and generate huge repair bills. Regularly scheduled service prevents unexpected break downs, and prolongs the life expectancy of equipment.
Nothing works all the time though, so be sure to create a cash emergency fund for unexpected expenses. And be sure to update your budget figures regularly by including new expenses and regularly inspecting equipment to schedule essential maintenance.
Average Repair and Maintenance Costs
Most restaurants try to budget 1-3% of sales for maintenance and repairs, according to a Restaurant Facility Management Association report. Costs vary by restaurant depending on equipment age, manufacturer quality, warranties, and repair responsibilities assigned by rental agreements (which is similar to, for example, heavy equipment rental rates).
During slow seasons, some owners cut back on maintenance expenses. You’ll want to avoid doing this if at all possible, because doing so just results in higher repair costs later on.
Try to establish a baseline for your specific restaurant by creating a spending history and or researching figures through National Restaurant Association reports.
Effective Budget Strategy
It’s best to develop a systemic plan that includes repairs, preventive maintenance and in-house repairs of small malfunctions. Keep cash flow in mind when budgeting, and don’t forget to keep a cash reserve to cut down on interest charges.
Use a spreadsheet to create your budget for the entire year, and be sure to list all equipment and recommended maintenance intervals. Consider all restaurant expenses and income so that you can project cash flow and anticipate problems.
In your yearly plan, be sure to schedule regular inspections of equipment and the premise. These inspections will help you update your budget to cover any unanticipated maintenance and repair projects.
Pro Tip: Refrigerators, Coolers, Freezers and Ice Machines break down most often in the Spring and Summer, whereas Cooking Equipment most often fails in the winter.
Use budgeting software or point-of-sale system resources to make calculations, or download free budget templates from Microsoft. As the year progresses, compare estimates with actual costs to keep budgets on track.
Remind employees how to properly care of equipment by keeping refrigerator and freezer doors closed, cleaning or replacing filters and following manufacturer-recommended best practices. We know employees don’t always care for equipment properly. To help with this you could make proper equipment care a part of the employee code of conduct.
Also keep in mind that an increase in sales means an increase in stress on equipment. As sales increase, be sure to increase your repair budget as well.
That’s it For Today!
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