Table of Contents
Chapter
4 -
Examination
Techniques
for the
Food and
Beverages
Industries
(Restaurants and
Bars)
Introduction
Restaurants
can be
full
service
food
operations,
where
one is
seated
and
orders
from a
wait
person,
paying
at the
end of
the
meal,
with an
average
check of
$15 and
above.
Restaurants
can be
limited
service
food
operations,
such as
fast
food or
casual
dining,
where
one
orders,
pays
for, and
picks up
their
own food
and may
clear
their
own
table,
with an
average
check of
less
than
$10.
Both
types
may
offer
take out
food or
may
deliver
food.
Both full service and limited service restaurants may be chains, which simply mean there are more restaurants like it in other locations.
Both full service and limited service restaurants may be franchises, which means an owner has purchased a license (called a franchise) to sell a restaurant’s food and use its brand, logos, and name.
But one fact that is consistent is that all restaurants have numerous sales transactions with small dollar amounts, taking place in a short time frame, such as during lunch or dinner. Many restaurants, especially smaller or closely held ones, are cash intensive and employees and/or owners handle large volumes of cash transactions every day.
For this reason, it is important to evaluate internal controls. When a sole proprietor counts cash at the end of the day, records all entries in the sales journal and makes the bank deposits, there is a possibility not all cash is reported and deposited. This can also be true when the same person takes the order, fills the order, receives the payment, records the payment and may even balance the cash register at the end of the day.
Restaurants have a high rate of turnover of employees who often have access to the inventories as well as the cash. As such, there is a potential risk of employee theft and embezzlement unless the restaurant implements and maintains a set of good internal controls.
Conversely, there are restaurants that have proper accounting systems, a good system of internal controls, and owners who report all transactions. These tend to be successful and profitable businesses, partly because once a system is designed that truthfully accounts for every transaction, owners have the information supplied to them from the accounting system and make accurate and wise management decisions.
The challenge for the examiner is to separate restaurant owners who are in compliance with the tax laws from restaurant owners who have failed to satisfy their tax obligations. To do this, the examiner should focus on:
-
internal controls
-
unreported income by the restaurant,
-
cost of sales, and
-
Unreported tip income by the employees.
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Income
Restaurants
and Bars
usually
have a
large
volume
of
transactions
each
day,
they
allow
employees
to
handle
cash
sales
and cash
tips,
and they
receive
significant
cash
receipts
in a
small
period
of time.
For
these
reasons,
the
examiner
will
need to
assess
internal
controls
and
adequately
probe
for
possible
unreported
income.
The examiner should have the taxpayer explain how the entire customer process, from the food order to paying the check, gets recorded in the books, by whom and where. Since there will be a large volume of anonymous transactions it will be difficult to trace specific items to receipts. Instead, trace the process and test amounts:
-
Examine the customer checks for a sample shift, for example the 6:00 a.m. to 2:00 p.m. shift for a breakfast diner. Total the customer checks and determine where the income is initially recorded. It may be entered into a cash register and recorded on the tape, or it may be stored in a cash drawer and counted at the end of the shift.
-
Count the number of checks the servers turned in for the shift. This is the number of customers that each server waited on during their shift. Is the amount consistent with the taxpayer’s initial interview statements?
-
(Also, make a note of the items sold. Later, when you examine COGS, see if those items are replenished within a day or two. This could lead to the discovery that items not reported as sold, are continually being replenished.
-
This may be a source of underreported income or overstated COGS.)
-
Total the checks turned in by each server and match their entry to accounting records, such as daily sheets. Trace this amount to the monthly records and verify with the amount reported in the Statement of Profits and Losses.
-
Note the ratio of cash, check, debit card and credit card payments by customers. Is this consistent with the taxpayer’s initial interview statements? Is it appropriate for the business? Is the customer payment method consistent with the examiner’s observations?
-
Determine how cash is stored, used and/or deposited? Many times the full amount of cash is not deposited. A set amount of cash may be retained to be used as change or to pay vendors. For your sample day, if the cash received is not the amount deposited, have the taxpayer explain how the cash was used. Even though the gross receipts should be determined from sales, not the bank deposits, it is helpful to account for all of the cash for a sample period to acquaint you with the business operations and to understand the taxpayer’s policies on the use of cash.
-
Apply the taxpayer’s stated mark-up to purchases reported in the books. Is it consistent with reported gross receipts?
Cash management practices are a good indicator of the reliability of internal controls. If the restaurant or bar has no point-of-sales system that requires all transactions to be recorded, ask how they insure proper reporting and what measures are in place to discourage theft.
Internal controls can also be lacking in a system in which the controls designed for the point-of-sales system are not implemented, such as the recording of cash tips. This means that all of the cash received from customers is not accounted for and correct income is not reported. Usually in a bar, one person (for example, the bartender) may be handling all of the cash transactions including balancing out the cash drawers each day. This lack of separation of duties essential to a system of controls necessitates extending the income probe beyond the minimum required by the IRM.
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Additional
Income
Issues
If
additional
income
probes
are
needed,
consider
the use
of a
full
bank
deposit
analysis,
the net
worth
method,
a source
and
application
of funds
analysis,
or the
specific
item
method.
Additional
probes
usually
require
the use
of
third-party
contacts
and
third-party
contact
procedures
need to
be
followed.
(See IRM
4.10.4.5.3
(4)
and/or
4.10.4.5.2
(4)).
It is
necessary
to get
complete
information
about
non-taxable
sources
of cash,
which
may
explain
any
understatements.
This is
especially
true of
cash on
hand and
of cash
hoards.
(See IRM
4.10.3.8.4.)
Since
the bar
or
restaurant
industry
is
largely
a
cash-based
one, the
indirect
methods
discussed
in this
section
may only
show
that an
understatement
of
income
exists.
It may
be hard
or
impossible
to
detect
how the
understatement
was
achieved.
For
example,
the
taxpayer
may only
be
reporting
income
from one
cash
register
when two
are
used,
etc.
The only
way to
possibly
uncover
this is
to ask a
lot of
questions
and keep
your
eyes
open
during
the tour
of the
business.
Another
helpful
technique
is to
visit
the
operation
during
its
normal
business
hours
and
observe
how
transactions
are
handled.
Additionally,
you may
find it
useful
to
contact
state
regulatory
agencies
such as
liquor
control
boards
or
gambling
operations
boards.
These
state
boards
routinely
send
agents
to
restaurants
and bars
to sit
in on
the
business
operations
unannounced
and
observe
the
operations.
They
prepare
a report
of their
observations,
which
may be
available
to the
IRS
examiner.
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Bar
Income
As in
any
income
tax
examination,
the
auditing
techniques
used
depend
on the
quality
and
quantity
of the
taxpayer’s
books
and
records.
If the
taxpayer
is a
large
bar that
maintains
inventory
records
which
detail
the
daily
and/or
monthly
purchases
and
sales of
liquor,
then the
liquor
cost
percentage
can be
computed
and
applied
to total
purchases
to
determine
the
gross
receipts
and
gross
profit
of the
taxpayer.
If the
taxpayer
is a
small
"Mom and
Pop" bar
that
does not
maintain
detailed
purchase
and sale
records,
it may
be
difficult
and time
consuming
to
compute
the
purchases
for one
day or
one
month.
In this
case, it
may be
preferable
to rely
(at
least in
part) on
third-party
information
to
verify
purchases
and
compute
the
mark-up
on
cost.
The
mark-up
may then
be
applied
to total
purchases
of
similar
items to
approximate
the
business
gross
receipts
and
gross
profit.
Using
the
Liquor
Cost
Percentage
to
Compute
Gross
Receipts
To compute gross receipts using the liquor cost percentage, the following steps should be taken:
-
Determine the cost of some of the more popular brands of liquor
-
Determine the sales values of the bottle if all liquor out of these bottles were sold
-
Divide the sales value into the cost to get the potential pouring cost
Example
1
Computing
the
liquor
cost
percentage:
-
Determine the cost of liquor:
The taxpayer's records and verification from third-party sources indicate that the cost per quart is $4.48. -
Determine the sales value of the bottle:
A quart has 32 ounces in it. If the taxpayer poured 1-1/4 ounces per drink, there would be 25.60 drinks per bottle. (32/1.25 = 25.60)If the taxpayer sold the drinks for $1.10, then the sales value per bottle less sales tax of $1.97 would be $26.19. (25.60 X $1.10 = $28.16 -$1.97 = $26.19)
-
Determine the pouring cost percent:
Cost per bottle/Sales value = Pouring cost %
This gives you the potential pouring cost percent.
Cost $4.48 / Sales value $26.19 = 17.1%
-
Determine the gross sales:
Purchases/Pouring cost % = Gross sales
If 17.1
percent
is
applied
to total
purchases
of
$5,000,
the
gross
receipts
should
be
$29,239.77
or
($5,000/17.1%
=
$29,239.77).
Gross
Receipts
(100%)
$29,239.77
Less:
Purchases
(17.1%)
($
5,000.00)
Gross
Profit
(82.9%)
$24,239.77
(Note:
Using
the
formula
discussed
above,
the
computations
could be
used to
calculate
the
total
sales
value of
all
bottles
sold in
a week
or a
month,
etc.
Consider
a factor
for
waste
and
spoilage
of about
5% to 8
%. Also,
subtract
out the
sales
tax from
the
cost.)
Using
the
Mark-up
on Cost
Method
to
compute
the
Gross
Receipts
If
it is
difficult
to
determine
a
taxpayer’s
daily
and/or
monthly
purchases,
the
Mark-up
on Cost
Method
may be
used to
compute
gross
receipts
and
gross
profit.
This
method
works
closely
with the
liquor
cost
percentage
method;
however,
different
percentages
are
being
determined.
As with
the cost
percentage
method,
the cost
and
sales
value of
the
various
items
needs to
be
computed.
Then,
the
mark-up
on cost
can be
computed.
Mark-up
on cost
is the
amount
of the
sales
price
over the
cost of
an item.
Example 2
Simplified
Sales Price 10.00
Cost 5.00
Goss Profit 5.00
Mark-Up on Cost = Sales price/Cost
$10.00/$5.00
= 200%
The
following
steps
should
be taken
to
compute
gross
receipts
based on
mark-up
on cost:
-
Determine the mark-up of the various alcoholic items the taxpayer sells. The mark-up should be determined, if possible, in the initial interview. If the taxpayer does not know the mark-up of the bar items, you must compute it based on the sales price of drinks and the cost of the drinks.
-
Determine the purchases made by the taxpayer.
You can obtain this information from the invoices provided by the taxpayer, if available and accurate. If accurate records are not available, you should request the names of all of the vendors from the taxpayer in the initial interview. Following third-party contact procedures, send letters to the vendors requesting all records of purchases made by the taxpayer in the years under examination or contact other available sources. -
Apply the mark-up to the purchases of the various types of alcohol.
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As in
the
earlier
simplified
example:
Cost x
Mark-up
=
Projected
sales
price
Mark-up
= 200%
Cost
= $
5.00
Sales
Price =
$10.00
($5.00
X 200% =
$10.00
Projected
sales
price)
The
steps
discussed
above do
not take
into
account
amounts
for
spillage,
happy
hour
prices,
etc.
This
information
must be
determined
in the
initial
interview
so that
the
taxpayer
can be
allowed
these
amounts
in
determining
the
correct
gross
receipts.
Sales
price
per
drink/Cost
per
drink/
mark-up
of drink
Computing
the
mark-ups
on the
various
types of
drinks.
Alcoholic
Drinks
Sales
Price
per
Drink --
Take the
average
of the
more
popular
drinks
served
in the
bar, as
stated
by the
taxpayer
in the
initial
interview.
It is
also
important
to
determine
the
amount
of
alcohol
in each
drink,
comparing
the
taxpayer’s
statements
to a
bartender
recipe
guide.
Cost
per
drink =
Bottle
price /
Number
of
drinks
in
bottle
The
bottle
price is
an
average
price of
alcohol
based on
information
from
your
local
liquor
dispensary.
Draft
Beer
Draft
beer is
sold by
the one
quarter
keg and
one half
keg. A
one
quarter
keg
contains
992
ounces
of
beer. A
one half
keg
contains
1,984
ounces
of
beer.
The beer
distributors
calculate
that
there
are
approximately
190
glass
servings
per one
half keg
and 93
servings
from a
one
quarter
keg.
This
calculation
accounts
for foam
and
spillage,
which is
common
with
draft
beer.
Sales
price is
based on
the
price of
the beer
as
listed
on the
menu and
confirmed
during
the
initial
interview.
Divide
the
sales
price by
the size
of the
drink to
get the
sales
price
per
ounce.
It is
important
to
determine
the size
of beers
served,
ounces
in each
glass,
pitcher,
etc.
Bottled/
Canned
Beer
Sales
price of
the
bottled/canned
beer is
based on
the
price
for the
bottle
according
to the
menu and
the
taxpayer’s
statements
in the
initial
interview.
Cost of
the beer
is an
average
cost of
beers
available
for sale
by the
taxpayer.
Bottles
and cans
are
usually
sold by
12-pack
or case
(24);
therefore,
divide
the cost
by 12 or
24.
Wine
Sales
price
per
glass is
based on
the
price
listed
in the
menu.
Divide
the
sales
price by
the size
of the
glass to
get
sales
price
per
ounce.
It is
important
to
determine
in
initial
interview
the
ounces
in each
serving.
Cost of
the wine
is an
average
cost of
wine
available
for sale
by the
taxpayer.
Wine can
be sold
by the
bottle,
box, or
keg,
therefore,
take the
cost of
the unit
divided
by the
number
of
ounces
to get a
cost per
ounce.
Wine
Coolers
Sales
price by
the
bottle
is based
on the
menu
price
and
confirmed
by the
taxpayer
in the
initial
interview.
Cost of
the
bottle
is an
average
cost of
wine
available
for sale
by the
taxpayer.
Wine
coolers
are
usually
sold in
case
lots of
24.
Divide
the cost
by 24 to
get the
cost per
the
bottle.
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Court
Case on
Percent
of
Markup
Method
The
percent
of
markup
method
of
establishing
income
is
illustrated
in
Cebollero
v.
Commissioner,
T.C.
Memo.
1990-618,
aff.d,
967 F.2d
986 (4th
Cir.
1992).
During
1982,
1983 and
1984,
Manuel
Cebollero
owned a
retail
liquor
store in
partnership
with his
former
wife.
Because
the
Service
was
unable
to
confirm
the
percentage
markups
provided
by Mr.
Cebollero,
the
prices
on Mr.
Cebollero’s
price
list and
his cost
of goods
sold
figures
were
used.
The
Service
computed
Mr.
Cebollero's
markup
figures
by
dividing
the
sales
price
for each
item on
the
price
list by
its
cost.
The
Service
made no
adjustment
for
sales or
discounts.
This
computation
revealed
that Mr.
Cebollero’s
mark-up
was
exactly
what he
said it
was. It
also
revealed
a large
understatement
of gross
income.
The
Court
largely
agreed
with the
Service,
but
allowed
an
adjustment
for
items
sold at
sale
prices.
Employee
Tip
Income
Reconstruction
Using
Indirect
Methods
Employee
tip
income
is
income
under
IRC
section
61 and
Treas.
Reg.
section
1.61-2(a)
(1) and
can be
reconstructed
using
indirect
methods.
The
percentage
markup
method
is one
of the
most
often
used
methods
to
reconstruct
unreported
tips,
although
the cash
expenditures
method
is also
used.
The
McQuatters
formula
is also
a common
method
to
determine
the tips
as an
hourly
amount,
a
percentage
of gross
sales or
receipts,
or a
percentage
of the
taxpayer's
wages.
The
McQuatters
formula
is
illustrated
in the
case
from
which it
gets its
name,
McQuatters,
et. al.
v.
Commissioner,
T.C.
Memo.
1973-240.
During
1967 and
1968,
Lorna
McQuatters
was
employed
as a
waitress
at the
Space
Needle
Restaurant.
Ms.
McQuatters
kept no
records
of her
tip
income
for
these
years.
Therefore,
the
Service
determined
her tip
income
indirectly
by the
following
method:
(1)
total
sales of
food and
beverages
reduced
by 10
percent
to allow
for low
or no
tips and
tip-sharing;
(2) this
amount
(that
is,
sales
subject
to tips)
was
divided
by the
total
number
of hours
worked
by all
waitresses
during
the year
to
arrive
at
sales-per-waitress-per-hour
average;
(3) this
average
was
multiplied
by the
number
of hours
in each
year
that Ms.
McQuatters
worked
to
determine
her
yearly
sales;
and (4)
her
yearly
sales
were
multiplied
by 12
percent
to
compute
her
yearly
tip
income.
The
Court
reduced
the tip
income
percentage
from
twelve
percent
to ten
percent.
Otherwise,
because
Ms.
McQuatters
kept no
records
of her
tip
income,
the
Court
upheld
the
Service’s
determination.
(Note:
Extending
the
income
tax
examination
of the
restaurant
to
include
employee
examinations
should
be
coordinated
with the
employment
tax
group.
If you
believe
an
employee
examination
is
warranted,
contact
your
Area
employment
tax
group or
make a
referral.)
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Income
from
Coin-Operated
Activities
Coin-operated
machines
located
in bars
or
restaurants
constitute
another
important
source
of
income.
Coin-operated
machines
may
include
jukeboxes,
cigarette
machines,
pool
tables,
dart
boards,
video
games,
candy
machines,
etc.
These
machines
can be
owned by
the
taxpayer
or
leased
from
another
party.
If the
machines
are
leased,
the
general
rule is
that the
income
generated
from the
machines
is split
based on
some
percentage
determined
by the
owner of
the
machine.
Income
generated
from
coin-operated
activities
is very
difficult
to
determine
accurately.
Therefore,
the
examiner
will
review
the
contracts
and
question
the
taxpayer
in the
initial
interview
regarding
the
operation
and
income
generated
by these
machines.
It may
be
necessary
to
secure
third-party
information
to
compute
this
income.
Additionally,
it may
be
helpful
to check
Internet
resources
including
the
Small
Business
Administration.
Many
vending
machine
companies
also
have
information
regarding
average
annual
sales
per
machines.
Rebates
from
Supplies
It is
common
practice
in the
restaurant
industry
for
suppliers
to enter
into
supplier
arrangements
with
restaurants.
Typically,
these
arrangements
extend
beyond
the
taxable
year.
For
example,
suppose
that
Supplier
A enters
into an
agreement
with a
restaurant
chain to
supply
soft
drink
concentrate.
The
contract
states
that the
supplier
will
advance
$5,000,000
to the
restaurant
chain
immediately
and in
return
the
restaurant
agrees
to
purchase
all of
its soft
drinks
from
Supplier
A for
the next
5
years.
The
Service’s
position
is that
upfront
payments
received
under
supplier
agreements
are
income
upon
receipt.
Other
Potential
Sources
of
Income
Activities
include:
-
Lottery tickets
-
Gaming pools
-
Vending machines
-
Franchise rebate income
-
Tenant/fixture allowance
-
Supplier or avertising rebates/incentives/reimbursement
-
Sales of assets
-
Cover charges for admissions
-
Selling concessions at sporting events/banquets/high schools
-
Renting out rooms for weddings and birthdays, etc.
-
Catering
-
Banquets
-
Bartering
-
Related party transactions
-
Kickback from vendors
-
Renting space for signs and video machines
These possible sources of income should be considered during the initial interview. The examiner will ask pertinent questions to determine if the taxpayer engages in these activities and how any income, including cash, is handled and reported on the tax return.
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Cost of
Goods
Sold
The use
of
statistical
and
ratio
analyses
is a
useful
pre-audit
tool for
an
examiner.
This can
tell the
examiner
if the
Cost of
Goods
Sold is
overstated
or out
of
balance
in
comparison
with
reported
Gross
Receipts.
This
could
occur
when the
inventory
amounts
are
‘estimated’,
when
there is
theft or
personal
use of
inventory,
or when
gross
receipts
are
under-reported.
Statistical and ratio analyses are not tests of the reliability of reported income or expenses and cannot be substituted for an income probe audit step. Rather, the use of statistics and ratio analysis in pre-audit may indicate that additional audit steps are warranted. The examiner still needs to perform audit tests to determine if the taxpayer’s books and records can be relied upon and must use direct or indirect methods to determine gross income. If necessary, however, ratios can be used to support audit conclusions arrived at using these methods.
Perform a comparative analysis for the current year, the prior year and the subsequent year.
Calculate Gross Profit Ratio (for at least three years)
Gross Sales – Cost of Goods Sold / Gross Sales = Gross Profit Percentage
This ratio shows how much of the sales represent gross profit.
Compare the gross profit percentage (GPP) with the ratios of similar businesses. You can use BizStats.com or Restaurant.org for this information. The GPP should be consistent with industry standards and be sufficient to produce a net profit.
Compare the GPP of the current year to the prior and subsequent years’ GPP. The GPP should be consistent in a business from year to year. A low GPP may indicate a problem with inventory valuation.
The examiner should ask the taxpayer for their mark-up percentage during the initial interview and compare that percentage with the calculated GPP. Any discrepancy should be followed up with the taxpayer and the explanation should be recorded in the work papers.
Inventory Turnover (for at least three years)
Cost of Goods Sold / [(Beg Inventory + End Inventory) / 2] = Inventory Turnover Rate
This ratio computes the number of times the inventory ‘turned over’ or was sold during the year. It is an indicator of a business’s profitability because when inventory turnover decreases, sales and net profit decrease. Conversely, when inventory turnover increases, sales and profits increase. This is because the goal of all retailers is to sell the inventory at a profit and buy more.
Compare the inventory turnover rate with the ratios of similar businesses. You can use BizStats.com or Restaurant.org for this information. The inventory turnover should be consistent with industry standards.
Compare the turnover of the current year to the prior and subsequent years’ inventory turnover. This will show if purchases and sales are consistent from year to year. Any deviations should be questioned.
A low inventory turnover rate should be questioned.
Compare the inventory turnover rate to the GPP. The ratios should parallel each other: increased GPP will be coupled with increased inventory turnover rate. If the GPP has decreased from last year, but the inventory turnover has increased, the Cost of Goods Sold may be overstated and/or the inventory amounts are not correct. This should be questioned and recorded in the work papers.
Example of Inventory Turnover Rate:
Beginning
Inventory $156,000
Ending
Inventory
178,000
Cost of
Goods
Sold
700,000
$700,000 / [($156,000 + $178,000) / 2] = 4.19 times during the year
Percentage of Increase or Decrease in Ending Inventory (for at least three years)
End Inventory – Beg Inventory / Beg Inventory = % Change in Inventory
This ratio shows any significant variations from year to year. It can indicate an overstatement in Cost of Goods Sold.
Compare the % change in ending inventory balances of the current year to the prior and subsequent years’ amounts. Any significant increase or decrease in ending inventory should be questioned.
Ratio patterns can indicate unreported income and suggest a need for additional income probes. For example, an analysis of a restaurant return indicates that the restaurant has suffered losses for 3 consecutive years or longer and has a high ratio of cost of goods sold to sales. It is reasonable to question the source of the cash necessary for the restaurant to continue operating under these circumstances.
Inspecting
the cash
flow
statement
may
pinpoint
potential
sources
and
assist
in
preparing
a Source
and
Application
of
Funds.
If the
same
restaurant
showed
an
increasing
inventory
turnover
rate
(indicative
of
increased
profits),
it would
be
reasonable
to
question
the
veracity
of the
inventory
and
purchases.
Overstated
Cost of
Goods
Sold
lowers
income.
Once the
examiner
has the
books
and
records
they can
analyze
the
ratio of
sales
per
employee.
If this
ratio is
low
relative
to the
industry,
it may
be
useful
to
inquire
about
the
turnover
ratio of
the
employees.
If, by
inspecting
the
Forms
W-2 and
payroll
records,
it
appears
that the
turnover
ratio is
high, it
may be
reasonable
to
assume
that the
recurring
cost of
employee
training
is the
cause of
the
relatively
low
sales
per
employee.
A
restaurant
with
high
employee
turnover
may not
be
entitled
to take
the Work
Opportunity
Credits
or the
Welfare
to Work
Credit.
(See IRC
sections
51 and
51A.)
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Other
Ratios
Following
are some
additional
ratios
that can
be
calculated
using
the
facts
from the
books
and
records,
and
compared
to
industry
statistics.
The
examiner
should
question
the
taxpayer
regarding
any
discrepancy
and
record
the
taxpayer’s
response.
-
Prime Cost % = Prime Cost (cost of food and beverage sold plus Labor cost)/Total Sales
-
Food Cost % = Food Cost /Food Sales *
-
Labor Cost % = Total Labor Cost/Total Sales
-
Labor Cost % = Liquor Cost/Liquor Sales
-
Wine Cost % = Wine Cost/Wine Sales
-
Beer Cost % = Beer Cost/Beer Sales
-
General and Administrative % = General Administrative Cost/Total Sales
-
Sales per Seat = Total Sales/Number of Restaurant Seats
-
Sales per Square Foot = Total Sales/Restaurant Square Footage
-
Sales per Labor Hour = Sales/Full Time Employees
-
Inventory Turnover = Cost of Goods Sold/Average Inventory