Since many of you are trying coupon mailings to increase sales, I decided to review this popular topic. Frequently, I'm asked how to account for coupons in the food cost percentage calculation. This issue has no absolute answer. My preference could change depending on the length of the coupon campaign and the impact on total sales.
In general, my strong preference is to record the total gross sales and treat coupons as a method of payment. This approach provides a consistent base sales for cost % calculation. Net sales may reflect the coupon discount or you may want to record this activity as a promotional expense. It's a good idea to check with your accountant to make sure the treatment is consistent with previous periods.
Should you decide to extend the coupon campaign to a longer term, management should examine the overall impact on the operation. It's possible to keep costs in line with gross sales levels and experience rough times. If coupons represent over 5% of gross sales and the length of the campaign is indefinite, the operation may not be able to cover fixed costs.
A short term coupon campaign is a terrific way to meet new guests. Unit management should be alerted when a guest redeems a coupon. Rather than treating these customers as second class citizens, it's an opportunity to give special treatment to a potential long term patron.
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