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Running Your Business:
“10” Restaurant Financial Red Flags
By John Nessel

After 20 years in the restaurant industry, fifteen as an independent owner/operator and the last five as a consultant, I have experienced and observed just about every type of financial problem imaginable. As all restaurant veterans already know, this is a business that is very unforgiving when it comes to achieving bottom line profits. Based on the 2004 Restaurant Industry Operations Report published by Deloitte & Touche LLP, average pre-tax profit margins range from 4-7% (4% for Full Service and 7% for Limited Service restaurants). Not only is there little room for financial management missteps, the problem is compounded by the lack of business experience and basic financial skills that most startup restaurateurs bring to the table. Unlike many other small business’ that employ full or part time financial personnel, most restaurant owners cannot afford that luxury, and spend their days jumping from one operational task (or crisis) to another with the financial management of the restaurant not receiving the attention that it requires.  

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