How to turn the burden of budgeting into profitable performance

Let’s face it: budgeting can feel like an absolute chore. But the hard truth is that when you nail your process for setting accurate sales budgets a lot of the expenses in your business will get easier to control. Especially your labour cost.

In our own hospitality group, we used to compare our performance month-to-month against last year, but it was a nightmare. One month might have five weekends this year and only four last year, and suddenly, you’re not comparing apples with apples. It felt impossible to get a clear picture of our performance.

Things never clicked for us until we started comparing each day with the exact same day last year. Doing this changed everything for us. Here’s the simple equation we boiled it down to:

Last year's sales on exactly the same Monday + any opportunity that you have this year that you didn’t last year - any risks or competition that you have this year that you didn’t last year = the sales you’re likely to do next Monday.‍

Aka a realistic budget.

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Why is accurate budgeting so important?‍

Because it encourages you and your team to think critically about your business. Every time you set a budget at this level, you’re asking questions like:

• What’s changed since last year?
• What new opportunities or risks should we factor in?

This isn’t just healthy, it’s essential. When your budget feels realistic, your team buys into it, and that alignment can be the difference between a profitable week and one filled with cashflow battles and stressed-out staff.

Take one operator we worked with recently. He was helping a friend reduce his wage percentage from 40% to 28% in just four weeks. All he did was set a realistic sales budget, then kept pushing his friend to ask, “Are we on track to hit this? And does our roster align with it?” By setting a roster that matched his budget, he was able to reduce labour costs without sacrificing service quality. That’s the power of data-driven budgeting.

If you and your team can’t create an accurate budget, you’re flying blind on metrics like wage percentage. And without knowing what’s realistic, “just get it lower” isn’t a strategy - it’s a recipe for frustration. Take the week below, for example, where Saturday is a clear example of getting a budget wrong.
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We planned to do $20,000 on Saturday but only ended up doing $13,034, while the team on site ended up spending more on labour than we’d rostered. The overall effect of this combination was a jump from an estimated roster cost of 20.41% all the way up to 32%. If missing our budget by this amount became a regular occurrence, we’d be setting ourselves up for failure. The roster was just far too heavy to justify the sales numbers we were actually doing.

So where to from here? Start applying this approach. Pick one day this week and set a realistic sales budget using our equation. See how this shifts your conversations and your team’s focus. Then, do that across a whole week and watch the magic happen.

‍Want more tips on effective budgeting and incentives? Take a look at our free guide to hospitality management incentives to see how alignment around budgeting and incentives drives real profitability.

P.S. Don’t have the visibility over your numbers at a granular enough level to budget accurately? Book a demo of Loaded any time, and one of our hospo-experienced team will show you what nailing this looks like.