Why your restaurant is not profitable

When an owner calls, the presenting problem is usually "we're not making enough money."

In most rooms I walk, revenue is not the hole.

Food cost is 4-6 points above the band. Labour is rostered to a feeling. A Monday lunch loses money with the doors open.

If you Googled why your restaurant is not profitable, do not start with a new menu photoshoot. Start with prime cost.

Prime cost is the number

Prime cost = food and beverage COGS + labour, as a share of revenue.

• Target: under 65%
• Crisis: above 70%

Above 65% there is little left for rent (which should sit under 8-12% of revenue in a healthy independent room), utilities, and you. You can be "busy" and broke. That is the usual Australian independent story.

The three leaks I see first

Food cost on purchases, not usage. Theoretical vs actual never done. Yield skipped. Staff meals invisible.

Labour as a weekly average. Dead sessions dressed up as "building the vibe." Prep starting two hours before the first reservation because the last hotel did it that way.

You on the tools. The owner plates 40 covers, Instagram calls it leadership, and Monday's orders and variance never happen. The most expensive person in the building is often the owner on the pass.

What is not the first fix

A new brand. A new POS logo. Thirty extra menu lines. A marketing agency while prime cost is 72%.

Marketing a leaky room fills the leak with more waste.

A one-week test

Pull last week: revenue by session, labour hours, food invoices, a stocktake if you have one. Run the P&L health check: food %, labour %, prime cost. Write three priorities. Not thirty.

An operations audit is on-site, written report, 60-minute debrief, 10-14 business days. Fee quoted on the call. It exists because owners cannot see this from inside the week.

FAQ

Can a restaurant be busy and unprofitable?

Yes. Covers without margin is a hobby with rent.

What should I look at first, food or labour?

Whichever is further from the band on last week. Then sessions. Do not pick from mood.

Do I need a full recovery?

Not always. Audit first. 90-day recovery is for when the room is actually in a hole. Fee quoted on the call.

If this is your week, bring the ugly numbers, not the good Saturday. Book a call.

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