I still remember the first time I filed taxes for my business. In addition to having no idea what a write-off really was, I also didn't worry too much about guessing on the numbers. A few government audits later, I discovered what it really meant to do things the right way. Over the years, I have met lots of business owners that weren't too worried about fudging the numbers, and nearly all of them have run into problems. Proper accounting is important, which is why I created this website dedicated to business accounting. I know that if you learn the right way to do things and focus on integrity, your business can avoid a world of problems.
Food trucks are growing in popularity for both customers and entrepreneurs. But even though it's an enjoyable, low-overhead business for those who are passionate about food, a mobile food vendor still needs to be a profitable enterprise like any other, and many food truck owners fail to keep their truck on the road to success.
Managing your costs as a food truck business is essential to long-term stability and growth. In short, you have to understand and control the money you're putting into your services and what you're getting back out of it.
What should a food truck owner be analyzing about his own business in order to do that? The two big operating costs for trucks: inventory and payroll.
Inventory Cost Analysis
Tracking inventory for a food truck requires a detailed pen. For a truly helpful analysis, you need to be inventorying everything that goes into your truck and into your food. An accountant familiar with cost accounting can help you determine exactly how much it costs to make each food item, including overhead costs. It's only by understanding these numbers that you can really see if you're making a profit on each dish or location - as well as where to cut costs.
The best way to track the other side of the coin - how much inventory is going out each day - is with a good Point of Sale (POS) system. A POS system will not only speed up and make inventory tracking easier and reduce spoilage, but it will also help with the next project: analyzing payroll costs per unit.
Payroll Cost Analysis
Labor is the other half of your operating expense pie. Payroll costs are lower for food trucks than for brick-and-mortar restaurants, but that can also mean that there is less room to cut expenses. The most useful thing to figure out with labor cost is how many covers (persons or whole meals) are being served per labor hour and how you can better manage that ratio.
Your POS system helps you keep track of the covers served per day, week and month. Your accountant can then help you understand your payroll costs for the same periods – day, week and month. Then simply divide the cost of payroll by the number of covers served in that time frame.
What can you learn from this little math problem? By focusing on the number of covers or meals served rather than sales dollars, you can see how well your employees are providing customer service, how fast food is being turned out and what kind of repeat business you're getting from loyal customers (as well as where orders are larger, resulting in lower overhead). You can figure out how to better deploy employees and which employees are providing more productivity or better customer retention.
While it's not nearly as much fun to crunch numbers as it is to grill up a tasty new dish, doing the first diligently will help ensure that you can do the fun part for many years to come. Contact a company like Waggoner Frutiger & Daub CPA's for more professional help.Share
26 February 2015