This article is aimed at identifying the major factors contributing to QSR success and emergence of detailed budgeting as a critical success factor.
– Defines Financial Goals and Targets: In the context of a QSR detailed budgeting is a process by which a definite financial goals and objectives can be established regarding the revenues, profits, costs, etc. for a particular period of time. This provides some focus, some goal to aim towards.
– Supports Planning: When done effectively budgets and forecasts help a QSR to execute its operations effectively in areas such as raw materials, menu development, inventory and staffing. Such efficient resource utilisation leads to optimal resource planning which in turn boosts efficiency.
– Enables Performance Monitoring: As the detailed budget indicates above, other budget categories may be used to compare with the actual financial picture. By following these budgetary practices, it can be possible to initiate corrective actions for the variances occurred. It also aids in the assessment of people’s, departments’ and profit centres’ performances.
– Supports Decision Making: Analytical budgets provide direction when it comes to the decisions that firms need to make on growth plans, acquisitions, capital expenditures and marketing and promotional activities.
– Enhances Cost Control: Detailed budgets can also be useful to identify whether there is any expenditure that is unnecessary or whether many resources are being used. It is more effective for managers to keep costs in check than to spend only what is provided for in the cost plans.
– Aids Raising Funds: Consistent budgets and projection show the increasing growth of QSR business. This in turns creates confidence in the investors and lenders which is a good thing.
Therefore, budgeting in a QSR context is essential in driving revenues and controlling costs, in turn, monitoring the unit’s performance and enhance its decision-making process. The control of cash flow and standard setting for the allocation of funds are crucial factors in the financial success of any quick service restaurant.
