Break Even Point, Budget, Spirits

We started the morning off with odds n' ends. Dave visited a new restaurant in his neighborhood in New Jersey. An 8000 square foot casual Italian eatery took 5 years to open, spent 600K for it's liquor license. There are only 7 liquor licenses in the whole town, so while the disadvantage of the license is the price, it also limits the competition.

Maria's bar and restaurant in Queens had an unruly table on Father's Day, with a group of 3 kids at a 6-top running wild, upsetting many customers in the room. Thing is, the adults at the table were regulars of the last 15 years, Maria had gone to the woman's wedding, and other customers were yelling at them to control their kids. Not an easy spot.

Val and her husband went to Blue Hill and experienced some extremely over the top good service. When a piece of beet skin on a salad appeared to maybe be a bug, they took the salad back and brought out another app on the house. Then the waiter asked if the chef could change the vegetable component of their entree to match their wine, and THEN gave the a complimentary desert to smooth out the beet incident at the beginning of the meal.

On the other hand, Liz is working in a large Italian eatery by Yankee Stadium. A customer and his girlfriend/mother left their table after paying and the bussers cleaned the table, but then returned because he left his grillz (gold teeth) in a napkin. The manager basically said tough titties, but feel free to go through out garbage. The guy proceeded to pick through a few barrels of trash for an hour until he found the grills, but cursing and being loud and disorderly the entire time.

We looked at wine and beer last week, and today was a brief discussion of distilled spirits. Start with a sugar or starch and ferment. Something sugary like grapes becomes wine, grain becomes beer. Then distill by heating, which makes the alcohol evaporate first. It's captured, cooled, and collected.

No matter the source, at this point all distilled spirits are clear and neutral. They can be blended to make the product the same over large runs, or left to be unique. The spirit can now be aged in something like wood barrels for color and flavor (whiskey), or left alone (vodka), or infused with flavors (gin) or infused and sweetened (liqueur).

Next up was a practice example of a profit and loss statement with some predictions of the coming year, and we had to make the budget based on those predictions. A budget, after all, is just a profit & loss statement that is projected into the the future.

The balance of the class was dedicated to reviewing the concept of the break-even point, where you leave the land of loss and enter the utopia of profit. Remember there are two kinds of costs: fixed and variable. A fixed cost like rent is paid and then it is done -- it is independent of sales. A variable cost is incurred by sales. If there are no sales, there are no variable costs. But if you sell a burger, and it costs $2 to make, if you sell one or 10,000, it's still $2 a burger. So if you reach your break even point and you sell a burger for $5, your profit ain't $5. Sure, your fixed costs are done, but your variable costs are with you. So that first $5 burger after your break even point means a profit of $3.