The Income Statement: The Single Greatest Key to Success, Part Two

Profitability and success are our goals! Last month and this month, I am focusing on the important role the income statement plays in reaching those goals. Last month, we reviewed how to accurately calculate

Cost of goods sold (COGS) Labor cost Operating costsThe restaurant and bar businesses can be very tough, but sometimes we make it harder on ourselves. Putting together an accurate income statement and then using it every month to refine your operation is the difference between profit and loss. If you did not get a chance to see the first part, please bring yourself up to speed.

Overhead Can Tell Us Something About Our BusinessOverhead includes rent, administrative costs and utilities. In the restaurant industry, I typically look for utilities to be between 3 and 4 percent, rent between 6 and 10 percent, etc. When these costs fall out of the expected range, I know we have a problem. One of my clients had a water bill that was about 1 percent of their monthly income. One month…