by Landon Taylor Nelson

The Moment That Set It Off

Invoice day turned the office into a paper ocean. Boxes on the floor, emails pinging, and three spreadsheets open for reconciliation. A line labeled “program fee” appeared on the processing statement with no owner. Chicken breast was two dollars higher than last month with no note from the vendor. Two subscriptions billed for the same job because a trial was never cancelled. None of it looked dramatic on its own. Together it was not small. That pile was the signal. The dollars were not hiding in the rush. They were sitting on the desk.

Why This Phase Exists

Phase 1 shows where work slows. Phase 2 prices those slowdowns. If you cannot price the problem, you cannot prioritize the fix. Cost Analysis converts friction, overlap, and drift into simple dollars so leaders can choose the next move with open eyes.

“Price the problem before you pick the tool.”

Margin erosion is usually gradual. Fixed fees accumulate on statements. Idle seats stay active after staff churn. Labor drifts away from sales by daypart. Top items creep up a few cents at a time. No sirens in the moment. Real money over a month.

What Cost Analysis Is (And Is Not)

This is not a forensic audit or a hunt for villains. It is an operator’s roll-up of the true run rate for systems, labor, and vendor terms. We measure total cost of ownership, not sticker prices, and compare options in plain dollars per month and impact per unit.

Scope

• Processing: effective rate, fixed and add-on fees, settlement cadence
• Software and hardware: contracts, invoices, leases, maintenance
• Labor: variance by role and daypart, punch edit patterns
• Vendors: top-item price drift, substitutions, contract compliance
• Overlap: duplicate functions, idle seats, unused reports

Output

A one-page cost sheet with six columns: Issue • Current Cost • Better Option • Payback • Owner • Verification

How We Run It

1) Gather facts

Three months of processing statements, POS settlement reports, software and hardware invoices, four weeks of schedules and punches, six months of invoices for top spend items, and any active contracts.

2) Do the simple math

• Effective processing rate = total fees ÷ total processed volume
• Labor variance cost = (actual hours − scheduled hours) × average wage
• Item price drift = current price − 90-day average
• SaaS overlap = monthly cost of redundant tools or idle seats

3) Compare options in cash terms

For each issue, write the current cost, the alternative, the risk, and the breakeven. Choose the move with the fastest payback and the least operational disruption.

4) Assign owners and dates

Each move needs an owner, a due date, and a way to verify savings on the P&L.

“Math turns debate into decisions.”

What Cost Analysis Tends to Reveal

• Effective processing rate higher than expected once fixed fees and add-ons are counted
• Two tools doing one job because a transition stalled
• Hardware leases that now exceed replacement cost
• Lunch thin and dinner padded because staffing ignores sales by hour and channel
• Top items creeping up without documentation, or substitutions delivered without review
• Reports that consume time without changing a decision

Proof Without the Hype

A three-unit group carried duplicate back-office tools after a partial migration and accepted a new “compliance” fee on processing. We cancelled the duplicate, reset terms to match real volume, and tied schedules to sales by hour. The changes cleared about five thousand dollars per month. No new software. No campaign. Just cleaner terms and better alignment.

Signs You Are Ready for This Phase

• You cannot explain your effective processing rate in one sentence
• New statement fees appear, or fixed fees do not move with volume
• Tiered pricing looks good on paper but you never hit the volume break
• Monthly minimums or gateway fees charge even on slow months
• Chargebacks or refunds carry extra fees that no one is tracking
• A “PCI non-compliance” fee sits on the statement without a plan to clear it
• Redundant subscriptions or idle seats show up on invoices
• Add-on modules are paid for but never used in daily work
• Hardware is leased with auto-renew terms and no replacement plan
• Service calls for failing terminals or printers are frequent and unbudgeted
• Labor variance repeats by daypart, and punch edits are common
• Schedules are built from habit rather than sales by hour and channel
• Top items show price creep without documentation
• Substitutions arrive without approval or credit reconciliation
• Vendor invoices do not match contracted prices or pack sizes
• Counts do not tie to prep or ordering, and waste goes unlogged
• Theoretical vs actual food cost gap does not narrow month to month
• Reports consume time without changing a decision
• Month-end still surprises you more than it should

These are a few of the signals. Every operation shows them in its own way, but the pattern is the same: small leaks that add up to real cost.

What Changes After a Clean Cost Analysis

Conversations shift from opinion to arithmetic. Processing terms fit volume and risk. Duplicate tools disappear. Vendors meet prepared buyers. Schedules align to sales instead of habit. The stack gets smaller and cheaper, and the savings show up on the P&L.

Why It Sits Second in the Method

Assessment reveals the work. Cost Analysis prices it. Without both, you either fix the wrong thing or pay too much to fix the right one.

Want a Hand?

If you want a neutral view of your true costs, we can run this analysis with your team, quantify the savings, and leave you with a short list you can execute at your pace. If you prefer to start on your own, use the gather list and calculators above and pick the first three moves with the fastest payback.

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