To create a baseline maintenance budget, the following questions need to be answered.
Many restaurants perform their maintenance on a reactive model and expenses can be erratic and fluctuate from period to period depending on which piece of equipment needs emergency service.
Typically, according to the National Restaurant Association, maintenance costs can be approximately 1.5 percent of sales on average. Other general maintenance figures estimate it generally to be between 2 and 6 percent of a business’s overall budget.
Many restaurateurs fail to allocate a sufficient or realistic budget for maintenance and this lack of planning can produce devastating effects. Not only does this neglect the basics of good accounting, but this negligence causes maintenance to become inefficient and ineffective. It can also cause a restaurant to harbor multiple unsafe conditions. Having a budget for maintenance ensures a restaurant is working its finances as effectively as everything else.
To create a baseline maintenance budget, the following questions need to be answered:
What was spent last fiscal period?: Whether it’s based on an annual or another reasonable time period, it is best to analyze the previous expenses for both reactive and preventive, or planned, maintenance from a similar time period.
What upcoming expenses are planned?: Assessing the needs of equipment nearing the end of their lifespan as well as deferred maintenance activities is important in creating an appropriate budget. Additionally, it is important to factor in on-going maintenance needs, like filters and lightbulbs that will need changing.
What recommended maintenance is needed?: Determining the on-going maintenance needs of the restaurant is important. It is essential to have a professional service technician to assess the needs of major assets like refrigerators, freezers, ranges, and ovens. Professional maintenance assessments are cheap and help decision-makers see what problems may be upcoming. Additionally, it can be helpful to see what service is due, over the coming fiscal period, based upon the manufacturer’s recommended maintenance schedules.
What are industry averages?: Another way to evaluate if the budget is appropriate is to consult industry reports like those by the National Restaurant Association and the Restaurant Facility Management Association.
What emergency needs does the restaurant have?: When making the budget for maintenance, look over previous receipts for breakdown or reactive maintenance. If there aren’t any previous receipts, a good idea is to add an additional five percent to the overall maintenance budget.
There are ways that a savvy restaurant manager or owner can optimize their maintenance budget to be leaner and more efficient. These ways allow the decision-maker to plan out their maintenance on a more regular interval rather than on the fly as they are often expected to occur.
Get a Preventive Maintenance Plan: Preventive maintenance is the process of being proactive and scheduling service to avoid expensive breakdowns. For restaurants that typically only use maintenance when an asset breaks down, this process will standardize maintenance spending and decrease it over the long term. This is due to a lower frequency of emergency repairs. Furthermore, by adding preventive maintenance procedures the life of assets will become longer moving replacements further out into the future.
Think Seasonally: Thinking of the seasonal needs of the restaurant is important in reducing maintenance planning. Rather than waiting to service things like HVAC equipment during the summer high season when prices are even higher than the temperatures, plan service in advance of the need. This will help to save money.
Scale Projects: Consider budgeting for long term maintenance projects well in advance of needs. If an oven will need a major overhaul in five months, it can be helpful to pre-budget the expense over a few months to have the money in advance of the need.
Use Technology: Incorporating technology will make budgeting for maintenance easier. Things like condition monitoring sensors can further decrease preventive maintenance spending by allowing the scheduling of maintenance to only occur when equipment actually needs it. Additionally, tools like a CMMS can help to track assets, warranties, equipment statuses, and work history to increase not only the accuracy of future budgeting but to improve preventive maintenance performance.
Include Vendors: Including vendors in preplanning maintenance needs gives management the option to discuss payment plans to spread out the spending for a large project. It may also be useful to see if they have any deals for ongoing preventive maintenance tasks.
Reassessment: A good rule of thumb for any maintenance budget is to reassess the maintenance needs of the restaurant semi-annually. This reassessment can factor in historical data, CMMS information, the age and performance of equipment, and a review of the maintenance strategy. A review of the maintenance strategy is needed as equipment nears the end of life, where it becomes more cost-effective to put money that would be used for preventive maintenance towards replacement and use a breakdown maintenance model of service instead.
It may at first seem to be a daunting task to create a maintenance budget for a restaurant; however, the budget can be adjusted as more information becomes available. As restaurant management learns the needs of the equipment and optimizes maintenance, it will make budgeting even easier.
Warren Wu has years of restaurant experience from being a waiter at Common Theory Public House in San Diego, California. He now leads growth for UpKeep.