AT TARGET scenario (this location)
| Line | % | $/mo |
|---|---|---|
| Revenue | 100% | $125,000 |
| Food Cost | 30% | $37,500 |
| Labor | 28% | $35,000 |
| Prime Cost | 58% | $72,500 |
| Occupancy + other ops | 35% | $43,750 |
| Net Profit | 7% | $8,750 |
Annual net profit at target: ~$105,000
Birchwood Kitchen: 12-Month Red-Flags Audit
First-pass review of the trailing twelve months of operating data (April 2025–March 2026) for a single location. Surfacing the patterns that repeat month after month and warrant owner-level attention before they compound.
Owner Summary
Across the trailing twelve months, the clearest signal isn't any single bad month. It's the distance between what Birchwood should be making and what nearly every recent month shows, and the fact that the gap has been widening.
- Vendor price creep (~$1,200/mo): the same items cost more than a year ago. The same SKUs from the same vendor, with no pack-size or quality change, are running $0.20–$0.25 per unit above last year's pricing. Nothing was renegotiated, so the creep compounds every month.
- Discount rate drift to 4.9% (~$1,000/mo): a behavioral pattern. Your discount rate sat at your 4.1% target a year ago and has drifted to 4.9% today, with 35 manager-override comps in the latest month and no POS-enforced approval rule.
- Weekday labor overage (~$800/mo). On soft weekdays, labor has averaged 32% of weekday sales against a 28% target, leaving roughly $200 of overage per week, or about $800 a month, almost every week of the year.
- Inventory shrinkage gap (~$500/mo, growing). The most recent count came in larger than the one before it, so the gap is widening rather than closing, and waste logs are incomplete.
- After-hours voids: control/theft risk (~$250 quantified, exposure unknown). 18 of 24 voids occurred after close, all tied to two employee IDs with no reason codes, so the headline issue is a possible control issue, not just dollars.
The money isn't disappearing in one place, and it isn't a one-time event; it's leaking across five operating patterns that repeat every month. At industry-consistent targets Birchwood nets roughly $8,750/month. The trailing three months are closer to $5,000. That is a ~$3,750 monthly gap, about $45,000 a year, and the five patterns below trace to all of it.
How This Analysis Was Built
A short note on where the numbers come from and how confident each finding is, so you can weigh the report the way you would weigh a trusted manager's read.
This audit draws on five operating systems: Toast POS (sales, voids, discounts, and comps by employee), 7shifts labor and scheduling (scheduled vs. actual hours and cover counts), supplier invoices (five vendors, priced SKU-by-SKU against the same period a year earlier), MarketMan inventory (theoretical vs. physical counts), and third-party delivery statements (DoorDash, UberEats). The review covers the trailing twelve months, April 2025 through March 2026, with the most recent month and quarter read against the store's own earlier-period and same-period-prior-year baselines.
Because this is a single location, findings are graded against the store's own history rather than a sister store: for each metric, the store's stronger earlier periods set the reference the current period is measured against. To separate seasonal swings from operating drift, each metric is also compared against the same period one year earlier, so a slow January reads as a slow January rather than a new problem.
Every finding below carries a confidence tier so you know how hard to lean on it.
HIGH confidence: complete data for the category and period, with corroborating context confirmed during the review.
MEDIUM confidence: complete data without operator-confirmed context, or partial data with strong corroborating context. The analytical reasoning is shown so you can evaluate the finding yourself.
MEDIUM confidence: complete data without operator-confirmed context, or partial data with strong corroborating context. The analytical reasoning is shown so you can evaluate the finding yourself.
ADC's framework also carries a LOW tier, weighted at 50% toward any performance-guarantee threshold, but no LOW-confidence findings appear in this report; the sample is held to HIGH and MEDIUM findings only. Most findings here are HIGH confidence, three are MEDIUM, and each MEDIUM finding states what would move it to HIGH.
What this analysis does not cover: anything outside the data provided. Qualitative factors such as a new competitor, nearby construction, weather, or a short-staffed week are not captured unless they surfaced in the numbers, and any finding that needed operator context we did not have was held back rather than guessed. As with any first pass, figures are directional until validated against source systems; ADC surfaces operating patterns, it is not a formal financial or compliance audit.
The Profit Gap Over Time
Target profit
~$8,750 / mo net
~$105K / yr
Recent pace (last 3 mo)
~$5,000 / mo net
~$60K / yr
Monthly gap
~$3,750 / mo
~$45,000 / yr
A year ago Birchwood was running close to target. Net profit pace has fallen quarter over quarter to its current ~4%, while revenue held near $125,000/month. The trend table below shows the drift; the five red flags that follow trace to roughly $3,750/month in recurring leakage.
Assumes $125,000 monthly net revenue.
CURRENT most-recent-month performance
| Line | % | $/mo |
|---|---|---|
| Revenue | 100% | $125,000 |
| Food Cost | 32% | $40,000 |
| Labor | 29% | $36,250 |
| Prime Cost | 61% | $76,250 |
| Occupancy + other ops | 35% | $43,750 |
| Net Profit | 4% | $5,000 |
Annual net profit at the current leakage rate: ~$60,000
Trailing 12-month trend (by quarter)
| Period | Revenue | Food Cost | Labor | Prime Cost | Other Ops | Net Profit |
|---|---|---|---|---|---|---|
| 2025 Q2 (Apr–Jun) | $125,000 | 30.5% | 28.0% | 58.5% | 35.0% | 6.5% / $8,125 |
| 2025 Q3 (Jul–Sep) | $125,000 | 31.0% | 28.4% | 59.4% | 35.0% | 5.6% / $7,000 |
| 2025 Q4 (Oct–Dec) | $125,000 | 31.5% | 28.7% | 60.2% | 35.0% | 4.8% / $6,000 |
| 2026 Q1 (Jan–Mar) | $125,000 | 32.0% | 29.0% | 61.0% | 35.0% | 4.0% / $5,000 |
Math check: each quarter's net = 100% − prime cost − 35% other ops. Net pace fell from 6.5% to 4.0% across the year while revenue held near $125,000/mo. The pattern, not a single month, is the finding.
Identified monthly leakage
Leakage by red flag
| Flag | Pattern | Monthly Leakage |
|---|---|---|
| Vendor price creep (same items vs. 12 mo ago) | Recurring, compounding | ~$1,200 |
| Excess discounts (4.9% vs 4.1%) | Drifting up over the year | ~$1,000 |
| Weekday labor overage (32% vs 28%) | Almost every week | ~$800 |
| Inventory shrinkage gap | Growing count over count | ~$500 |
| After-hours void control/theft risk | Concentrated, 2 employee IDs | ~$250 |
| Total identified | ~$3,750/mo (~$45K/yr) |
The ~$3,750 is the monthly leakage tied to the five recurring patterns at this single location. It accounts for the full gap between target net profit (~$8,750/mo) and the recent pace (~$5,000/mo). The after-hours void figure is the quantified portion only; the full control/theft exposure is unknown until receipt-level review is complete.
Methodology: HIGH confidence. Monthly P&L reconstructed from complete POS sales and reconciled labor and invoice data for the location, benchmarked against the 7% net-profit operating target and the store's own trailing-twelve-month and prior-year baselines. The quarterly figures reconcile to the trend and math-check lines above.
Your Operating Targets
These are your working operating targets: thresholds for deciding where to investigate first, not accounting standards. Prime-cost guidance follows Baker Tilly (> 65% is structurally hard to profit from). Food and labor context reflects National Restaurant Association (NRA) operator data, which the NRA itself notes is descriptive, not a goal. Discount, void, and waste targets are your working thresholds from field experience.
| Metric | Your Target | Watch | Red Flag | Industry context |
|---|---|---|---|---|
| Food Cost % | ≤ 30% | 31–33% | > 33% | NRA actuals typically ~31–32% |
| Labor % | ≤ 28% | 29–32% | > 32% | Many casual operators run 30%+ (NRA) |
| Prime Cost % | ≤ 60% | 61–64% | > 65% | Baker Tilly: > 65% structurally hard to profit |
| Discount / Comp rate | ≤ 4.1% | 4.2–5.8% | > 5.8% | Your working target |
| Void value | < 1% of sales | 1–2% | > 2% | Your working target |
| Food waste | < 10% of food cost | 10–14% | > 15% | Your working target |
| Net profit | 5–7% | 2–4% | < 2% | Full-service casual typically 3–5% |
Sources: Baker Tilly prime-cost guidance; NRA restaurant operations data.
Top 5 Red Flags
Vendor price creep ranks first because it is the largest recurring leakage and compounds every month it goes unaddressed. Discounting ranks second because it is the clearest behavior-policy drift over the year. Labor follows because the overage repeats on soft weekdays; shrinkage and void control risk follow through inventory and POS review.
01
RED FLAG
Vendor price creep (~$1,200/mo): same items, higher prices than a year ago
Twelve months ago these were your prices. Today the same SKUs from the same vendor cost more, with no offsetting pack-size or quality change. The figures below are price-creep leakage dollars, not total item cost or total food cost.
Unit price: current vs. 12 months ago (same vendor, same pack)
| Item | Price 12 mo ago | Current Price | Increase / Unit | Monthly Qty | Monthly Price-Creep Leakage |
|---|---|---|---|---|---|
| 80/20 ground beef (lb) | $4.12 | $4.37 | +$0.25/lb | 1,900 lb | ~$475/mo |
| Chicken thighs (lb) | $2.89 | $3.09 | +$0.20/lb | 1,700 lb | ~$340/mo |
| Roma tomatoes (case) | $22.00 | $23.50 | +$1.50/case | 160 cases | ~$240/mo |
| Salmon fillet (lb) | $8.40 | $8.65 | +$0.25/lb | 580 lb | ~$145/mo |
| Total | ~$1,200/mo |
Benchmark callout: Actual: same-SKU prices up $0.20–$0.25/unit vs. a year ago, never renegotiated. Your target: re-quote against two alternate vendors and hold pricing on a fixed review schedule.
Monthly leakage: ~$1,200 price-creep leakage
Methodology: MEDIUM confidence. Current invoices compared SKU-by-SKU against the same items on the same vendor account twelve months earlier. Confidence is medium because several older invoices arrived as scanned PDFs requiring manual line-item entry, so a small number of SKUs beyond the four shown are not yet cross-checked.
02
WATCH
Discount rate drift to 4.9% (~$1,000/mo): a behavioral pattern
Your discount rate sat at your 4.1% target a year ago and has drifted to 4.9% today. No POS-enforced approval rule or written comp policy was found. The trend, not any single comp, is the issue.
Discount rate by quarter (trailing 12 months)
| Period | Discount Rate | Monthly Gross Sales | Monthly Discounts Given |
|---|---|---|---|
| 2025 Q2 (Apr–Jun) | 4.1% | $125,000 | $5,125 |
| 2025 Q3 (Jul–Sep) | 4.4% | $125,000 | $5,500 |
| 2025 Q4 (Oct–Dec) | 4.7% | $125,000 | $5,875 |
| 2026 Q1 (Jan–Mar) | 4.9% | $125,000 | $6,125 |
| Your target | 4.1% | n/a | $5,125 |
POS export: most recent month, March 2026
| Discount Type | Transactions | Total Value | % of Gross |
|---|---|---|---|
| Manager override / comp | 35 | $1,750 | 1.4% |
| Employee meal discount | 18 | $875 | 0.7% |
| Promotional (app promo) | 60 | $3,500 | 2.8% |
| Total | 113 | $6,125 | 4.9% |
Benchmark callout: Actual: 4.9% discount rate, up from 4.1% a year ago. Your target: 4.1%.
Review POS job permissions and require manager approval for comps.
Review POS job permissions and require manager approval for comps.
Monthly leakage: ~$1,000
Methodology: HIGH confidence. Discount and comp rates pulled directly from complete Toast POS exports across the trailing twelve months and compared against the store's own prior-year rate and your 4.1% working target. The absence of a POS-enforced approval rule was confirmed against job permissions during the review.
03
WATCH
Weekday labor overage (~$800/mo, recurring)
Weekends carry the volume; the weekday test is whether you flex labor when covers soften. Across the trailing twelve months, weekday labor has averaged 32% of weekday sales against a 28% target, and the gap shows up almost every week.
Average weekly weekday labor bridge (trailing 12 months)
| Metric | Weekly Average |
|---|---|
| Avg weekly weekday sales | ~$5,000 / week |
| Actual weekly weekday labor (32%) | ~$1,600 / week |
| Target weekly weekday labor (28%) | ~$1,400 / week |
| Avg overage cost | ~$200 / week |
| Monthly leakage (×4 weeks) | ~$800 / mo |
The issue is not weekday sales volume; it is fixed staffing on soft weekdays, repeated week after week.
Monthly leakage: ~$800
Methodology: HIGH confidence. Built from POS-integrated scheduled-vs-actual labor and cover counts (7shifts and Toast) for the period, compared against the 28% labor target after normalizing for daypart mix. The weekday pattern was corroborated against the posted staffing template during the review. The daypart-level breakdown of this finding follows in the card directly below.
By daypart: Tuesday lunch and early-week late night run hottest
Weekday labor averages 32% vs. the 28% target. The dinner rush holds near target; the drift is in thin lunches and late-night closes that stay staffed for weekend-size covers.
Weekday labor cost % by daypart
| Weekday | Lunch (11a–2p) | Dinner (5p–9p) | Late Night (9p–close) |
|---|---|---|---|
| Monday | 41% | 31% | 46% |
| Tuesday | 44% | 30% | 43% |
| Wednesday | 39% | 29% | 41% |
| Thursday | 37% | 28% | 39% |
| Friday | 31% | 27% | 33% |
Cells above 32% (your labor red-flag line) are where staffing outruns covers. Tuesday lunch (44%) and Monday late night (46%) are the two worst.
Monthly overage by daypart
| Daypart | Avg weekday labor % | Target | Weekly overage | Monthly overage |
|---|---|---|---|---|
| Lunch (Mon–Fri) | 38% | 28% | ~$110 | ~$440 |
| Late night (Mon–Fri) | 40% | 28% | ~$80 | ~$320 |
| Dinner (Mon–Fri) | 29% | 28% | ~$10 | ~$40 |
| Weekday total | 32% | 28% | ~$200 | ~$800 |
Monday-morning move: Drop Tuesday lunch FOH from 3 to 2 between 11am–12:30pm (ticket volume doesn't build until ~12:30pm), and run the Mon–Wed late-night close with one cook instead of two after 9pm. Those two changes recover roughly $130/week on their own.
Daypart-attributable overage: ~$800/mo (the full ~$800 in Red Flag 03, not additive to the ~$3,750 total)
Methodology: HIGH confidence. Built from POS-integrated scheduled-vs-actual labor and cover counts (7shifts and Toast) for the period, compared against the 28% labor target after normalizing for daypart mix. The weekday pattern was corroborated against the posted staffing template during the review.
04
WATCH
Inventory shrinkage gap (~$500/mo, growing)
Waste logs incomplete (3 of 7 days). No 86 records matched the variance. Prior reconciliation (Feb 2026) showed ~$350, so the gap grew roughly 40% in one cycle.
Reconciliation: most recent count, March 2026
| Category | Theoretical | Physical | Variance | Price / Unit | Gap $ |
|---|---|---|---|---|---|
| Chicken thighs (lb) | 847 | 822 | −25 | $3.09/lb | $77 |
| 80/20 ground beef (lb) | 623 | 603 | −20 | $4.37/lb | $87 |
| Salmon fillet (lb) | 214 | 206 | −8 | $8.65/lb | $69 |
| House wine (750ml) | 72 | 68 | −4 | $18/bottle | $72 |
| Dry goods / produce | reconciled | reconciled | n/a | mixed | ~$195 |
| Total gap | ~$500 |
Benchmark callout: Actual: ~$500 shrinkage this count, up from ~$350 last count. Your target: waste < 10% of food cost and complete daily waste logs.
Monthly leakage: ~$500
Methodology: MEDIUM confidence. Shrinkage triangulated across categories from MarketMan theoretical-vs-physical counts (February and March 2026) priced at current unit costs. Confidence is medium because waste logs were complete for only 3 of 7 days and no 86 records matched the variance, so the cause is not yet isolated.
05
WATCH
After-hours voids: control/theft risk (~$250 quantified, exposure unknown)
Total void value $346 ÷ $125,000 sales = 0.28% of sales (inside the < 1% target), so the dollars are small. The headline issue is the after-hours count concentration: this is a possible theft/control issue until receipt detail proves otherwise.
Void log: most recent month, March 2026
| Employee ID | Voids | Avg Ticket | Total Voided | Reason Codes |
|---|---|---|---|---|
| Emp #312 | 10 | $13.00 | $130 | None on file |
| Emp #418 | 8 | $15.00 | $120 | None on file |
| All other staff | 6 | $16.00 | $96 | 5 of 6 coded |
| Total | 24 | n/a | $346 | n/a |
18 of 24 voids occurred after close; company guideline is < 8 unresolved/month. Total void value = 0.28% of sales (target < 1%), so the dollars are small but the pattern is the concern. 18 of 24 tied to two employee IDs, none with a reason code. Most-voided items: wings (8×), house cocktails (6×), desserts (4×). Quantified after-hours shrinkage: ~$250; full control/theft exposure is unquantified until receipt-level review is complete. Investigate the pattern before accusing staff.
Benchmark callout: Actual: 24 voids, 18 after close tied to two employee IDs, none coded. Your target: < 8 unresolved/month and a reason code on every void.
Monthly leakage: ~$250 quantified; control/theft exposure unknown
Methodology: MEDIUM confidence. Void counts and timing are complete from the Toast POS log for the period, and the after-hours concentration on two employee IDs is unambiguous. Confidence is medium because the cause is not operator-confirmed: no reason codes are on file and receipt-level detail has not been reviewed, so exposure beyond the ~$250 quantified stays open.
Owner Action Plan
- This week: Re-quote 80/20 ground beef, chicken thighs, salmon fillets, and roma tomatoes against two alternate vendors; bring the current vendor back to last year's pricing or switch, and set a fixed price-review schedule.Potential savings: ~$1,200 in price-creep leakage per month.
- This week: Review POS job permissions and require manager approval for comps. Double check that every employee has the appropriate job assigned, then review the discounted checks and follow up with staff.Potential savings: $1,000 per month.
- Next scheduling cycle: Set cover-count triggers, add pre-shift cut rules for soft weeknights, and send staff home when projected covers are below threshold.Potential savings: ~$200/week. Total ~$800 per month.
- This week: Pull the after-hours void report filtered by employee ID; review receipts for Emp #312 and #418, require reason codes, add manager PIN approval for after-hours/no-reason voids, and monitor daily for two weeks. Treat as a control review before accusing staff.Potential savings: ~$250 per month, quantified; full control/theft exposure unknown.
- Before next invoice cycle: Manual inventory count compared by category against system count and cross-referenced to receiving logs.Potential savings: ~$500 per month.
Data Sources
| Source | Data Covered | Period |
|---|---|---|
| POS (Toast) | Sales, voids, discounts, comps by employee | Apr 2025–Mar 2026 |
| Labor/Scheduling (7shifts) | Scheduled vs. actual hours, cover count | Apr 2025–Mar 2026 |
| Supplier invoices (5 vendors) | Unit pricing by SKU, this year vs. last year | Apr 2025–Mar 2026 |
| Inventory (MarketMan) | Theoretical vs. physical by category | Feb & Mar 2026 |
| 3PO (DoorDash, UberEats) | Order volume, platform fees, refund rate | Apr 2025–Mar 2026 |
This mock report uses illustrative operating data and directional calculations. In a real ADC engagement, figures would be validated against source systems before recommendations are finalized. ADC surfaces operating patterns; this is not a formal financial or compliance audit.