Chapter 9 — Exercises

Thirty-two problems, graduated from recall through judgment. Items marked with a dagger (†) have worked solutions in the Answers to Selected Exercises appendix — try them before you look.

Do the arithmetic. A pre-opening budget is the one budget in a restaurant project that nobody audits, because there is no physical object to compare it to. That is exactly why you should be able to build one from a blank sheet.

Every scenario here is a constructed teaching example. Wage rates, fees, permit costs, insurance premiums, and licensing timelines vary enormously by jurisdiction — nothing in this set is legal or tax advice, and a real opening requires a real attorney, a real accountant, and a phone call to the actual authorities.

A. Recall and definitions (1–8)

1. Define pre-opening budget. Name the four categories the Bellwether project budget says it covers, and name three costs that fall inside a real pre-opening period but appear in none of them.

2. † Distinguish a friends-and-family service from a soft open. State what each one tests that the other does not, and name one legal obligation that applies identically to both.

3. Define menu rehearsal and list the six artifacts §9.4 says a rehearsal must produce. Which one is the cheapest consistency control in a restaurant, and why does almost nobody produce it before opening?

4. What is a plate-up? State three things the written record of a plate-up should capture and explain what happens on the floor when it is skipped.

5. † Define the honeymoon period. It does two things at once, both of which flatter the operator. Name both, and explain why the second one is arguably more dangerous than the first.

6. What is opening inventory, and why is it typically a larger line for a 68-seat full-service restaurant with a bar than for a 68-seat fast-casual restaurant?

7. Define the first ninety days. State the three reasons §9.7 gives for treating it as a distinct management period.

8. Explain the difference between a gate and an activity on a pre-opening timeline. Name the four gates identified in §9.2 and state, for each, the one thing an operator can do to influence it.

B. Building a pre-opening budget (9–15)

9. † Cost this. A 54-seat full-service restaurant with a small bar is opening. Build the pre-opening payroll line from the following crew, using the format of Figure 9.4. Total the hours, total the wages, and add a 15% employer burden.

10. Using your answer to problem 9: this restaurant's plan carries \$460,000 of annual all-in labor. Express the pre-opening payroll as a number of weeks of steady-state labor. Then state, in one sentence, what that figure tells a lender that a raw dollar amount does not.

11. † Build the opening beverage inventory for a bar with the following requirements: 95 spirit bottles at an average of \$23.00, a 32-SKU wine list carrying an average of 6 bottles per SKU at an average cost of \$14.50, three draft kegs at \$142 each, \$540 of packaged beer, and \$480 of mixers, juice, and non-alcoholic product. Total it. Then compute the beverage inventory as a multiple of one week's beverage usage, given planned weekly beverage sales of \$6,900 at a 21% pour cost.

12. A restaurant's planned food sales are \$980,000 a year at a 31% food cost. Compute weekly food usage. Then compute an opening food inventory representing 1.4 weeks of usage. State one reason an operator might deliberately open with less than that, and the specific cost of doing so.

13. † An operator's pre-opening budget line is \$28,000. Their bottom-up build comes to \$59,400. Compute the gap in dollars and as a percentage of the budgeted line. Their working-capital reserve is \$38,000 and their monthly fixed obligations are \$41,600. If the entire gap is drawn from the reserve, how many days of fixed cost does the remaining reserve cover?

14. Bellwether's build carries employer burden at 14%. Recompute the labor subtotal in Figure 9.1 at 11% and at 18%, and state the swing in dollars. Then name the single component of that burden most likely to explain the difference between two otherwise identical restaurants in different states.

15. † Add two servers to Bellwether's opening crew at 46 hours each and \$15.00 an hour, plus the 14% burden. Compute the added cost. Then argue, in no more than four sentences and using a number, whether it is worth it.

C. The countdown, the abatement, and the schedule (16–22)

16. Work a twelve-month countdown backward for a restaurant whose non-negotiable constraint is a patio that opens on 1 May. Place the certificate of occupancy, the start of hourly hiring, the menu rehearsal, the soft open, and opening day on actual dates. State your two riskiest assumptions.

17. † Bellwether's lease commences rent on the earlier of opening or thirty days after the certificate of occupancy, with three months (\$23,800) abated. The certificate is issued on 3 March and the restaurant opens on 28 April. Compute how much abatement is consumed before a guest arrives, and how much remains to cover the operating ramp. Use \$1,831 per week.

18. Using the same lease, state the latest opening date that consumes zero abatement if the certificate is issued on 3 March. Then state, in one sentence, why this single date is the most important line on a pre-opening timeline.

19. † An opening slips five weeks after the full crew is on payroll. Weekly cost of carrying the crew at reduced hours is \$5,900 including burden, and the abatement burns at \$1,780 a week. Compute the total cost of the slip. Express it as a percentage of a \$40,000 pre-opening budget, and name two costs the calculation omits.

20. A general contractor tells you at week −8 that the certificate of occupancy will "probably" be issued in three weeks. Your sous chef's start date is week −6 and the rest of the crew is week −4. What do you do, what do you say to the sous chef, and what is the specific arithmetic behind your decision?

21. † A restaurant with a planned 26% beverage mix on \$24,000 of weekly in-room sales learns its liquor license will be six weeks late. Pour cost is 20%. Compute the weekly beverage contribution at risk and the six-week total. Then compute the cost of a six-week delay if carrying the crew costs \$5,400 a week and the abatement burns at \$1,700 a week. Which is cheaper, by how much, and what is the answer you should actually give?

22. Write the memo. Your certificate of occupancy has slipped by three weeks. Twenty-one people have signed offer letters with start dates. Write the email you send them: no more than 250 words, it must be honest about the delay, specific about the new date, specific about what they should do in the meantime, and it must not make a promise you cannot keep.

D. Rehearsal, the soft open, and reading the ramp (23–28)

23. † A restaurant plans 110 covers on a peak night across a three-hour service, with 38% of covers arriving in the peak hour and an average of 1.6 plates per cover. Compute the plates the kitchen must send in the peak hour and the average interval between plates. Then state what you would do differently in rehearsal if the measured capacity turned out to be 45 plates an hour.

24. Design a four-service soft-open plan for a 54-seat restaurant, in the format of Figure 9.5. For each service specify covers, guest population, menu scope, and — this is the graded part — the single question you are trying to answer. Then compute the food and beverage cost of the whole plan at \$14 a cover.

25. † Read the ramp and find the problem. A new restaurant's first thirteen weeks:

The plan's annual figures are \$1,300,000 of revenue at 61% prime cost. Compute quarter revenue, quarter prime cost in dollars and percent, and the excess prime cost against the 61% target. Then compute what prime cost weeks 14–52 must achieve for the year to land on plan, and say in one sentence whether you believe it.

26. Using the table in problem 25: the operator's weekly prime cost is falling by roughly a point a month. Is that good? Answer with reference to what a falling prime cost on falling sales actually indicates, and name the one additional number you would demand before congratulating anyone.

27. † A restaurant's dinner covers by night, weeks 1–4 versus weeks 9–13:

Compute the weekly totals and the percentage change for each night and for the week. Then identify which night is the business's real problem, state what fixed labor on that night is costing, and name three options — one of which must not be "market it harder."

28. Build this schedule to a labor target. For the Tuesday in problem 27 at 38 covers and a \$46 average check, you have a salaried chef, a salaried manager, and the following hourly positions available: line cooks at \$19, prep at \$17, dishwasher at \$15, servers at \$15, host at \$16, bartender at \$16. Build a Tuesday schedule that holds hourly labor at or below 18% of that night's sales. State what you cut, what you refuse to cut, and what breaks first if 38 becomes 55.

E. Judgment, policy, and the Business Plan (29–32)

29. The judgment call. Your bottom-up pre-opening build is \$36,300 over the budgeted line. Your partner proposes closing the gap by cutting server training from 46 hours to 20, cutting the soft open from four services to one, and opening with a bar stocked to two-thirds depth. Write a one-page response. It must (a) concede what is true in the proposal, (b) price each of the three cuts against the cost it creates, and (c) state what you would do instead. Use numbers.

30. The ethics problem. Two weeks before opening, your crew is working long days and morale is high. Three servers offer to come in on their day off, unpaid, to help set up the dining room "because they want to." Your budget is tight and they mean it sincerely. State what you do, what you say to them, what the law generally requires (see §9.3 and Chapter 20), and — separately — why the cultural answer and the legal answer point in the same direction here.

31. † Business Plan extension. Build the Pre-Opening Budget & Timeline section for a restaurant of your own design: 60 seats, full service, beer and wine only (no spirits), dinner six nights, no brunch, in a market you actually know. Produce (a) a bottom-up pre-opening budget in the format of Figure 9.1, (b) a twelve-month countdown in the format of Figure 9.2, (c) a four-service soft-open plan, and (d) a one-paragraph statement of what your build totals against what you would have allocated before doing it. Show the gap, or show why there isn't one.

32. Business Plan extension. Chapter 9 decomposed Bellwether's frozen 60.0% annual prime cost into a projected 66.6% first quarter and a required 58.0% remainder. Write the two entries this creates for the plan's assumptions register (Chapter 4): the belief, the number, why it might be wrong, and the specific test that would confirm or refute it inside the first ninety days. Then write the third entry, covering the \$139,240 revenue bridge's arrival in weeks 14–52.