RESTAURANT COSTS

Home/Topics/RESTAURANT COSTS

RESTAURANT COSTS

Home Forums Where I Stand RESTAURANT COSTS

Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #7471
    Rana Goodman
    Keymaster

    RESTAURANT COSTS:

    By Robert Stern

    Accounting 101 Based on the December 15 Board of Directors meeting packet, we are told to date that Restaurant Costs/Expenses were $235,416 including nearly $100,000 for the Clarkson law firm.

    The Board at the December meeting approved $806,630.24 Refurb/Preopening costs subject to contingencies and coming from the reserves. Their to date numbers failed to include the $8,906.95 approved at November meeting for the kitchen’s water softener expenditure.

    It’s hard to know what else was missed and what will be missed in the future because clearly there is a weakness in internal reporting controls and the Audit Committee’s function includes reviewing internal controls and recommending operational changes. That said the 7144 homes portion of these expenditures to date is $147.11 per household. The future is uncertain but the 2023 budget shows $316,800 as restaurant expense.

    Professional fees may include work on the restaurant and possibly payroll has some added labor not included in the $316,800. Don’t really know. Utilities is budgeted at $879,484 and it is unclear how much of that if any is restaurant related that will need to be allocated. Same for Insurance at $625,400.

    The budget package failed to disclose these key assumptions. And another key component when evaluating restaurant cost that has not been considered is Administrative Overhead burn rate and it should be there in the future. For example, COO Sandy Seddon and the Communications Director and perhaps other staff are spending time planning and creating and delivering communications and other restaurant related support.

    Some of their cost needs to be allocated as a restaurant expense through the Administrative Overhead allocation. At a minimum for the 2023 Budget the per household on paper only using the $316,800 is $44.34 per household and that number who knows because the restaurant won’t open till the 2nd quarter.

    This hidden reserve will come into play for budget explanations in 2023. And without proper allocations including Administrative Overhead the presentation will be deficient and misleading. Reader Beware. All that we can hope for going forward is an accurate internal accounting so that homeowners know the true cost. Regardless of your view on the restaurant we all are entitled to a fair and accurate representation of the numbers.

    #7474
    alan h
    Participant

    I have to ask, just what knuckheads are in charge? I would like to know since the dell webb company left us with a restaurant how much has the board spent on the place since then. There must have been about 6 to 8 different operators. It must be close to 5 million dollors by now.

    #7485
    Martin Winger
    Participant

    When are they installing the gas, water, and electric meters?

    #7486
    Stephen Anderson
    Participant

    My understanding is that the restaurant is on its own gas meter.  Shawn Evans has also reported that he believes there are two water meters serving the area although they are not readily accessible.  The biggest issue is that the restaurant does not have its own electric meter. The cost to rewire that end of the building in order to put all of the circuits in the restaurant on a separate meter would most likely cost six figures.  The reason is that all original wiring would have to be upgraded to current City code standards.

    Separate metering would be more critical if the Association were engaging in a lease arrangement with a vender.  Since the restaurant belongs to the Association, my belief is that with metering of the gas and water, management will be able to reasonably  estimate the electric cost based on looking at the past when a restaurant was running and also by looking at the present and then comparing it to when the restaurant starts operating.  From our estimations, the contract with WGH was written to provide the Association with the first $48,000 prior to revenue sharing when the restaurant moves beyond revenue neutral.

     

    #7487
    Nelson Orth
    Participant

    Don’t forget the $33,000 we paid for the business/alcohol license.

    #7499
    Martin Winger
    Participant

    OMG…isn’t it just a wonderful world where inuendo’s are in reality truths that don’t need verification.  With due respect see the above from our board president:

    “Shawn Evans has also reported that he believes there are two water meters serving the area although they are not readily accessible.”  “Mr. Evans belives”…wow, how nice for us as they may never be checked for monthly usage and we won’t ever pay the monthly cost of usage!

    Oh, and the cost of electricity for the restaurant is not important either, is it?  So I just wonder how much electricity is used by the restaurant when it is up and running?  Again, as above, as our board president said above,  “I guess it’s not important because costs are a part of the rest of the facility and when it becomes time to fix things in the restaurant it’ll be free to the restaurant because it is only managed by others and doesn’t count.”

    And since costs are so stable who will take in consideration of many rising costs will never be considered.  Is this a fools consideration especially since as we see most restaurants…legitimate restaurants, aren’t advertising prices anymore.

    What a wonderful world we live in where details don’t matter!

    #7500
    alan h
    Participant

    At a minimum the utilities allocation for billing should be based on the square footage percentage the restaurant occupies.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.