As we mentioned in last month’s blog post, not everyone is trained in accounting or bookkeeping. Or to make sense of Balance Sheets and Profit & Loss Statements. However, knowing the basics of F&B accounting can help you understand your accountant or bookkeeper better and goes a long way to ensuring the success of your business. This month, we share the second concept which is of importance to the success of your F&B business.
Concept 2: Labour Costs, Occupancy Costs & Operating Expenses
Labour costs, occupancy costs & operating expenses are various categories of expenses which you need to pay close attention to.
‘Wait,’ you ask. ‘Why do you use confusing words like ‘labour costs’, ‘occupancy costs’ and ‘operating expenses’. Can’t you refer to them as wages, rental expenses and other expenses?’
Well, firstly, labour costs includes more than wages. It also includes superannuation, work cover, training costs, employee benefits, payroll taxes (if applicable), etc.
Secondly, occupancy costs includes more than rental expenses. It also includes council rates, water rates, utilities and insurance.
Lastly, operating expenses include everything else – from marketing and advertising to serviettes and cutlery.
Why should you care about Labour Costs, Occupancy Costs & Operating Expenses?
Besides cost of goods sold, these are the areas which you have opportunity to cut costs, and increase profits. Admittedly, the occupancy expenses and some operational expenses aren’t as easy to cut back on, and they usually make up a smaller portion of your overall expenses. However, you can keep a lid on costs by ensuring that you review the costs of various supplies and negotiate with your suppliers regularly.
Once you understand where funds are being expended, you can monitor it and make changes whenever necessary in order to save more of it. More savings means more profits in your pocket as the business owner.
Contact us today regarding a fixed monthly fee bookkeeping package that will suit your needs, and more importantly, free up your valuable time so that you can focus on building a profitable F&B business.