Understanding Restaurant Accounting Methods
Although accounting for restaurants is a topic that many restaurateurs try to avoid, it is an essential element of running a business. You cannot manage your restaurant properly without going into the accounting details. Even if you hire a professional to handle all the financial aspects of your business, you need to understand what is involved. A strong understanding of the basic accounting practices allows you grow your profitability and run your restaurant in a financially sustainable manner.
But you didn’t get into the restaurant industry to become an accountant, did you?
Many restaurant owners detest accounts, simply because they do not see any value addition to the business. While bookkeeping and accounting are not part of your core business, they are important. You may feel that they are pulling you away from where the real action is, out front and in the kitchen. But the importance of this administration cannot be emphasized.
You probably joined the industry to make delicious food to serve and create a great environment for your patrons. Balancing your books and managing your finances are not really part of that overarching plan. Why should you be concerned about accounting then? Well, accounting brings deep insights into the financial status of your business and its performance in the market. For you to successfully manage accounting in your restaurant, you may consider hiring a restaurant accountant or investing in restaurant accounting software.
So, what is restaurant accounting?
Restaurant accounting is the process of interpreting and analyzing the revenue, cash flow, inventory, and income statements of a restaurant. It allows you to document all financial transactions of your business and determine its performance.
Good bookkeeping and accounting processes are essential to smooth running of a restaurant running. To help you with this process, we’ve compiled a guide with essential elements to keep in mind:
- Important vocabulary
- Major players
- Setting Restaurant Accounting Goals
- Common accounting methods
- Restaurant accounting FAQs
- Restaurant accounting tips
- How to Avoid Common Restaurant Accounting Mistakes
- Accounting software recommendations
- Accounting Reports to Prepare
Using the right restaurant accounting software and a restaurant-focused accountant allows you set your financial situation up for success while cutting down on unnecessary expenses. The software keeps track of what’s costing you extra money, where you can save, and where you’re doing well by investing in the tools you need.
Have a look at this guide and learn best way to run your accounting strategy:
1. Important vocabulary for restaurant accounting
Certain terminologies are important in understanding what constitutes accounting for restaurants. Not only will you understand the actual accounting process, but you will also know what each process entails. In turn, this will increase your chances financial success and responsibility in your restaurant.
Let’s start with some basic terms:
- Cost of Goods Sold (COGS): This is the cost of all the items and ingredients on your menu (Beginning Inventory + Purchased Inventory – Ending Inventory). This amount does not include restaurant labor costs. As a restaurant owner or manager, you need to understand COGs because they directly determine your business profitability. You can track this on per-item level to determine the amount that is spent on preparing every dish. Also make sure that the chefs follow the agreed-upon measurements for preparing every recipe.
- Restaurant Labor Cost:This is the cost of the labor needed to run your restaurant. The amount is important because it forms a significant portion of the restaurant costs as shown in the chart below.
Labor costs includes the amount spent on bussers, servers, hosts, and anyone else on your payroll. This also includes payroll taxes and employee benefits. This amount does not include your COGS. When calculating your restaurant labor costs, consider the following two points. First, employees who work for more than 40 hours weekly have a statutory entitlement to overtime rates for every extra hour worked. Second, tips the staff receive can have an impact on your minimum wage obligations. Take time to learn about your local tip credit rules and incorporate them when calculating your labor costs.
- Direct labor: This is the cost incurred for the maintenance of the restaurant. It may vary depending on the type of work required.
- Prime Cost: This is a combination of your COGS and labor costs. It includes all the cost incurred on food and beverage, payroll, taxes, and benefits). Restaurant owners and managers need to have a clear picture of prime costs because this is where majority of the money goes. This is an effective way of avoiding accounting mistakes that can have negative effects on your business.
- Chart of Accounts: This is a list that describes the areas where the money flows in and out of the restaurant. The categories include assets, liabilities, revenue, expenses, and equity. It is organized as under the balance sheet accounts (assets, liabilities, and owner’s equity), and income statement accounts (operating revenues, operating expenses, non-operating revenues and gains, and non-operating revenues and expenses). When organizing you chart of accounts, you may consider breaking these elements into subcategories like marketing budget, cost of goods sold, total sales figures, and inventory. An important tip from Lavu is to avoid over-complicating the chart of accounts. For instance, avoid making the cost of ketchup its own line item but try use fewer subcategories.
- Occupancy Expenses: This refers to fixed costs like rent, property taxes, utilities, and property insurance. It is the cost incurred for a brick and mortar location of a food truck to exist.
- Operating Expenses: This is everything else that you need to run your restaurant on a day to day basis, like marketing expenses, dishware, and supplies (napkins, silverware, etc.). In other others, this is the costs of running a restaurant apart from COGs, occupancy and labor.
- Operational Expenses: This is the cost incurred to support the running of everyday business. The cost will usually depend on the type of service being offered, your business size, and other variable factors.
- Fixed vs. Variable Expenses: Fixed expenses do not change with the amount of sales or services provided. They include occupancy expenses, restaurant labor, and operating expenses. On the other hand, variable expenses vary based on factors like the type of work required and amount of sales made. They include direct labor, commissions, operational expenses, and taxes. A service like Sourcery allows you to keep all your invoices in one place. This gives you a quick overview of your outgoings, allowing you to categorize your expenses and determine their impact on your revenue.
Now let’s take a look at some other, more in-depth terms:
- Cost-to-Sales Ratio: This is value derived by dividing food costs with food sales, multiplied by 100%. Ideally, the ratio should be between 28% and 35%, which is the restaurant industry average. This ratio is important because it shows how your restaurant is performing rather than focusing on some high figures of your prime costs.
- Food Cost Percentage: This value is calculated by adding your beginning inventory to food purchases, then subtracting ending inventory and dividing the value by food sales. Beginning inventory is your food inventory at the beginning of the month, while food purchases are the costs incurred by buying food ingredients during that given month. Your ending inventory is the food inventory at the end of that month, and the food sales are the total food sales for that month.
- Restaurant Accounting Cycle: This is the process that the accounting process takes in a restaurant. When preparing financial reports, accountant usually follow the accounting cycle of business transactions. The cycle starts with the buying of a meal by a customer, with the transaction being recorded by the POS system. This information can be transferred to an accounting journal, and later recorded in a general ledger for financial report preparations.
- Cashier’s Summary: This is a summary of the starting cash and all dollar amounts run through a particular register. Credit card transactions should be categorized by card company, if possible. Other numbers to record under cashier’s summary include sales tax, tips on credit cards, and how each payment was made (tender type).
- Reconciling the Balance Sheet: Although the balance sheet lists all the assets liabilities of a business, most people tend to go straight to the bottom like recorded in the Profit and Loss statement. However, you need to double-check the numbers in the balance sheet to make sure they are accurate before checking the P&L. This is an easy way of finding areas of your profitability that needs to be improved and that your financial reports represent the true nature of your business performance.
Each of these numbers need to be accounted for when running your restaurant. You’ll be in a better place to determine the financial health of restaurant if you keep track of them. Your restaurant variable expenses are highly volatile and can change easily from one month to another. Documented reporting and screening of these costs is integral to keeping the business afloat. You may use a restaurant management software to make sure you track these expenses and safeguard your profits. To give you a better understanding of what else is involved in restaurant accounting, let’s look at other important aspects.
2. The major players of restaurant accounting
Accounting for restaurants is not a one-person job. Even in small businesses, restaurant accounting is a function that requires the contribution of several players. It requires the cooperation of several teams working on different areas of your restaurant. However, you need to retrieve information from the team to ensure accurate information is recorded and accounted for.
Let’s examine the major players involved in the accounting process:
- As the restaurant owner, you are responsible for running the business with a vision and purpose. Your main goal may be to serve great food in a great setting. However, you also have a duty to ensure that the restaurant operations in a financially healthy way. For you to do this, you need to understand the restaurant accounting terminologies and how they relate to your restaurant’s needs. This means investing in the right tools, accounting software, and manpower.
- Your accountant. If you’re going to hire a professional, be sure to use a restaurant-specific accountant. Someone who specialized in restaurant accounting method will update you about industry benchmarks and guide you to understanding your financial goals. Since your accountant may be working with other restaurants, it is a good idea to set up goals similar to those of restaurants like yours. The accountant will help you with the following tasks:
- Your POS System. Ensure that your accountant’s software (QuickBooks or another other) integrates with your POS system. This integration will automate reconciliation of your sales records and bank deposits.
- Your front-of-house and back-of-house staff. Your FOH and BOH staff members are also major players. Your FOH staff will be using your POS system, which means they need to process transactions correctly and report their tips. Although tips are not subject to withholding and not classified as restaurant income, they need to be reported and taxes paid on them. Make sure everyone is responsible for reporting the right information.
Keep each individual’s role in mind and come up with ways of holding them accountable. For instance, your accountant should monitor the percentage of cash tips versus cash sales. This ratio should be similar to the ratio of credit card tips to credit card sales. This is an effective way of discouraging servers from keeping more cash tips than they made.
Each of the key players highlighted above are important to your restaurant’s financial success. None should be overlooks to ensure your restaurant financial records are accurate. Be sure to monitor each area and individual if you want you achieve success in your restaurant accounting process.
3. Setting Accounting Goals
Setting accounting goals for your business is a step closer to achieving your business financial health. While you may need to understand what accounting is in the first place, the goals that you set will determine the direction your business takes. Some of the common restaurant accounting goals include:
- Improving Tax Reporting: Among the basic functions of accounting in a business is tax reporting. Although you are required to pay taxes, rigorous accounting practices will keep your tax exposure minimal. When properly done, this will also reduce the worry related to auditing of your financial reports.
- Manage Your Expenses: By document your restaurant spending, you will know where the money is going. This way, you can reduce waste and identify where you can cut costs.
- Design Better Menu Pricing: While setting the correct price for your menu items is always a challenge, you can cover all the necessary expenses with sound financial system. Ensure to cover for item costs, labor and operational costs, and sales information.
- Achieve Accurate Staffing Levels: As noted earlier in this guide, labor comprises a significant part of the restaurant costs. As a restaurant owner or manager, you need to ensure you have optimal people working per shift. Have a look at your sales data to determine how many staff you need and your income statement to determine the amount you can afford to pay.
- Have Better Control of the Cash Flow: One of the biggest causes of small businesses failure is cash flow. You may be solvent on people, bit still lack enough money to meet your financial obligations. Lack of enough cash to pay your creditors and suppliers is an indication of poor cash flow management. To avoid such liquidity issues, ensure you have a sound accounting system.
- Plan for Growth: Accurate and detailed accounts are a powerful business forecasting tool. They answer questions regarding opportunity for restaurant growth, amount of capital needed to support growth, and area of the business that are growing or lagging behind.
4. Common restaurant accounting methods
When it comes to accounting methods, restaurants owners and managers can choose either cash or accrual accounting method. This section will explore the implications of choosing either of the methods:
Do restaurants use cash or accrual accounting?
Any restaurant with a revenue of below $1 million can choose an accounting method of choice. On the contrary, any restaurant with revenues of more than $1 million must use the accrual method. Here are the main differences between the two methods:
- Cash method. The cash accounting method the easier one for restaurants, but not always the most accurate. The method records income as it enters your bank account and expenses when they are paid. However, tracking income before expenses will make your restaurant seem more profitable than it actually is.
- Accrual method. The accrual method is different from the cash method in that it accounts for transactions as they occur. The revenue and expenses are accounted for right at the time of the transaction, regardless of when the payment is made. This creates a more accurate view of how expenses are incurred and where the income is coming from. The method also gives restaurants a more accurate understanding of their income and expenses.
Note: The “payment” occurs when cash is received and expenses are paid. On the other hand, the “transaction” is when goods are exchanged, such as food to a customer or supplies from the vendor to the restaurant.
Depending on your restaurant’s financial situation, you may or may not have a choice when it comes to the accounting method. Your restaurant accountant can guide you in the right direction.
5. Restaurant accounting FAQs
You may have some burning questions about accounting for restaurants and its importance. For instance, what is the difference between accounting and bookkeeping? What role does an accountant play in a restaurant, among other questions. Let’s have a look at some of these questions and what you really need to know.
What is the difference between accounting and bookkeeping?
Bookkeepers are responsible for recording financial transactions. On the other hand, accountants interpret, classify, analyze, report, and summarize this financial data. This is the biggest difference between restaurant accounting services and restaurant bookkeeping. While accounting involves interpreting and analyzing data, bookkeeping only focus on recording.
What does an accountant do in a restaurant?
Restaurant accountants keep track of cash flow, inventory, and income statements. They document all financial transactions for the restaurant. This includes recording each transaction (e.g., a meal purchased) in an accounting journal. Then the payments are recorded in a way a way that allows analysis for accounting purposes.
The role of an accountant cuts across all areas of operations in a restaurant. They need to count inventory on a weekly basis to ensure there’s neither too much nor too little. Similarly, they need to shows the restaurant’s profits and losses over a certain period of time by preparing an income statement. Also known as the P&L statement, it demonstrates the income of the business through earnings, expenses, and inventory. It is also important to track total sales and expenses on weekly basis to ensure the restaurant is not losing money and that it is cutting expenses where possible.
How much does a restaurant accountant cost?
A restaurant accountant will typically charge by the hour. The cost usually depends on the type of work, size of the restaurant, and its location. It will also cost you more to hire an accountant that it does a bookkeeper. This is because an accountant is both more trained and experienced in fieldwork than a bookkeeper.
What is the best accounting software for restaurants?
The best restaurant accounting software is cloud-based (or online). We recommend brand-name products, such as QuickBooks, because they offer specialized modules that are specifically meant for restaurant accounting.
As far as restaurant FAQs are considered, the key to successful accounting of a restaurant is hiring the right professionals and employing the right tools based on your restaurant’s needs. Take a look at your bottom line and determine if investing in a POS system that integrates with accounting tools is be worth it (spoiler: it definitely is!).
6. Restaurant accounting tips
Apart from asking yourself important questions about restaurant accounting, you also need to know what it takes to be successful in this area of your restaurant. The following section will provide some useful tips that will make accounting easier for you. From hiring an accountant to tracking your inventory, these restaurants’ accounting best practices will ensure you balance your books and stay on track.
Be sure to incorporate these tips:
- Hire an accountant. If the whole accounting process is confusing to you, it’s a good idea to hire an accountant to walk you through the steps and terminologies. A good accountant will guide you through the process while interpreting the data. Be sure to hire an accountant who has worked in the restaurant industry. One way of doing this is asking for referrals from other local managers or owners.
- Use the appropriate tools. A restaurant accounting software like QuickBooks allows you record your food sales, beverage sales, cashier’s summaries, operating expenses, and more easily.
- Choose a good Restaurant POS system. As mentioned earlier, your POS system should offer features that allow you to integrate with your restaurant accounting software. This will help you track inventory, labor costs and payment types.
- Pay your bills. Be sure to stay one step (or two!) ahead of your bills. Start by paying your bills once a week, then adjust accordingly. This could mean paying bills more often or less frequently depending on factors that the amount of bills and revenues generated
- Pay your taxes. Part of the reasoning behind hiring an accountant is ensuring you correctly track your taxes. Check local and state laws for the kind of taxes that apply to your restaurant. Take time to determine what your area’s sales tax rate is and how often this should be paid. Most tax payments are due every few months or annually, but the timeline will be determined after applying for employer identification number (EIN).
- Track Your Food Wastage: The impact of food wastage on your accounts cannot be ignored. You lose some profits every time something goes into the garbage. By tracking and recording your food waste accurately, you will be able to reduce their instances. While manual tracking can be effective for small businesses, a bigger restaurant will need integration of a system to cover this.
- Track your inventory. Managing your inventory provides valuable insight about the restaurant’s COGS. Your accountant can use your COGS to determine where you’re spending too much on food, if you’re ordering too much, or if someone is stealing.
- Hire someone to do your payroll. Payroll is a large undertaking. It may be worth outsourcing your payroll to ensure accuracy and keep you focused on the core of the business.
- Watch your sales. Day-to-day sales can impact other parts of your restaurant like inventory and payroll. Record all of your sales on a day to day basis to make reporting easier for later.
- Record Tips Separate: The tips that your staff members receive should be recorded separately from other revenues. Tips are not part of the restaurant income unless they are a service charge that appears on the bill. However, this information is necessary when calculating tip credit with respect to minimum wage and for tax declaration purposes.
- Collect and Store POS Data: A restaurant POS system provide important figures, and not just the amount of cash made in a data. For every transaction, a POS records a list of everything the table purchased, the number of covers at the table, the amount of time the table was occupied, and whether the payment was made in cash or with card. Collecting and storing this information will help you understand your sources of income and what they mean.
- Do regular P&L statements. Taking the time to generate profit and loss statements (whether on a weekly, monthly, or annual basis) will show you where your business is going financially.
Although there are lots of best practices to consider in accounting, it is more helpful to start with the fundamental. By building on these fundamentals, you’ll gain a better understanding of your restaurant’s financials. This is just the first step to achieving your restaurant’s financial success.
7. How to Avoid Common Restaurant Accounting Mistakes
Most restaurants avoid the topic of accounting because of various reasons. However, it is impossible to avoid this topic completely. While navigating restaurant accounting, you are likely to commit several mistakes. Even if you rely on a professional accounting, you need to be aware of the possible mistakes that you could be making. Let’s look a some these mistakes and how your restaurant can avoid them:
- Hiring a generic accountant: By generic, it means hiring a non-restaurant-specific accountant. While a qualified accountant will do all the works needed in accounting, they may not be of much help to your business if they have no specialized in restaurant accountant. The restaurant industry uses unique reports, KPIs, tax and business structures not used by other industries. Some of the other industries do not deal with daily or weekly reporting periods, revenues from tips, inventory metrics, and hyper-sensitive labor. Therefore, your best shot in accounting is hiring a restaurant-specialized accountant.
- Delay in Monitoring Restaurant KPIs: Failure to monitor your KPIs regularly and at the right time can leave your business running in losses. You need to review your COGS, prime costs, labor costs, and inventory counts on a weekly basis. Some restaurant owners do the mistake of monitoring these KPIs on a monthly basis putting their businesses at jeopardy. Although these KPIs are controlled, they an easily get out of hand when not monitored regularly. The best way to approach this is to monitor your restaurant KPIs on both a daily and weekly basis using data from your POS.
- Choose the wrong accounting period: Given the unique nature of the restaurant industry, choosing the right accounting period is critical. Since not all months are equal in length, an effective approach in accounting period can be basing them on a four-week timeline. You can choose either a Friday and count four Fridays to define your accounting period. Comparing revenue and costs between such period is more accurate than say a monthly accounting period.
- Errors in restaurant bookkeeping: It is common to have errors in your restaurant bookkeeping. You could enter a wrong value, which provide inaccuracy in the entire calculations. Perhaps you forgot to include meal discounts or entered the wring sales amount. Whichever the case, entering incorrect information into your restaurant books will result in skewed financial reports and KPIs. To avoid such errors, automate the bookkeeping process by integrating your accounting software to the POS system.
- Choosing the wrong accounting methods: Often, restaurant tend to choose the wrong approach or method for their accounting function. While the accrual method is the best for restaurant, some tend to use cash-based accounting method. This can make your restaurant seem profitable while it may be making losses. To ensure you report the accurate financial status of the restaurant, always use accrual method. The method is appropriate for businesses in the restaurant industry because it reports expenses as they are incurred and income as earned. Your restaurant COGS will be recorded as the inventory get used rather than when you pay your suppliers. This way you will have more accurate reporting.
8. Restaurant Accounting Software Recommendations
The success of restaurant accounting relies on the availability of information. The more information you have, the more accurate your account will be. You need to ensure that the information presents the true financial position of the business, and can be used for decision making.
While a professional will help in bookkeeping and adhering to accounting standards, a good accounting software will help you capture more data easily and more accurately. You should choose a restaurant accounting software that integrates with your POS system.
An accounting software will help you and your accountant keep accurate financial information. Once integrated into your restaurant POS system, the software will automate the collection and organization of all your financial transactions and data. It allows you to track your financial performance in real-time and reducing inherent errors related to manual accounting processes. In the pursuit for better accounting outcomes, consider the following programs and technologies:
- Accounts Payables (AP) and Accounts Receivables (AR) automation: Restaurants can now use several channels to send invoice. This includes paper invoicing, email, and online methods. A service like Sourcery allows you to easily process the invoices, generate reports, and offer on-touch payments.
- Point of Sale (POS): The restaurant POS system in the front-of-house order management system that is used by the wait staff. The data collected from POS is vital in showing them items with best sales. For accounting purposes, this information can be reconciled with purchase invoices.
- Employee Timesheets: If your employee timesheets are done on paper, it is time you consider switching to an electronic system. Not only will you automate the process, but also generate monitor changes in shift patters and generate reports on both total labor and overtime costs.
- Accounting Software: The software that you choose for your business will be the heard of your restaurant accounting infrastructure. A good software should track all the accounting data, and generate reports that can be used for decision making. Some popular systems include Sage, Quickbooks, Dynamics GP, Netsuite, and Xero.
Why You Need a POS System in Your Restaurant Accounting Function
A restaurant POS is the source of the vital data needed for your accounting system. Having a good POS system allows you to collect, track, and organize financial information in a better way. Since a POS is more than an ordinary cash register, it provides data that allows you to:
- Track Financial Performance: A POS system has the power to provide real-time information about the financial performance of the restaurant. Since the information is real-time, you can derive your sale-to-labor ration, get accurate sales averages, and other information at any time. Such information allows you to take action whenever you realize the financial performance of the restaurant is not as expected.
- Menu Performance Analysis: The POS system shows you the best and worst sellers in your menu. You can analyze your menu sale trends, identify highly demanded meals, and the status of your inventory.
- Restaurant Cost Analysis: The POS logs shows both the restaurant revenue and the cost incurred. You get to identify how much money comes to your restaurant and how much goes out.
- Identify Trends: Once of the attractive features of a POS system is ability to present historical trends of your restaurant. You can use this information to determine the direction your business is taking, and any changes that you may make to make more profits.
- Labor Optimization: You can leverage POS data to schedule your shifts better. With the reporting insights, you can identify when labor demand is high, staff activities that take up the highest costs, and ways to lower labor-related costs.
How does Lavu’s POS fit the accounting role?
Lavu’s POS system has an open API that allows for integration with accounting software, such as QuickBooks. You need to balance your books to be successful. If you’re not looking to spend hours going through spreadsheets and formulas, then this integration will simplify the accounting process for you.
Beyond these integrations, Lavu’s POS system offers inventory tracking, versatile reporting, and many other features that can help you easily run your restaurant’s operations. If you want to make your restaurant accounting and other tasks more manageable, check out Lavu!
9. Accounting Reports to Prepare
Collecting and storing accounting data is meaningless if you do not run reports. This is also the point where an investment in sound restaurant accounting practices and quality software starts to pay off. Accounting reports lets you know where your business is financially and areas you need to improve. Your restaurant needs several reports on various timelines, including yearly, monthly, weekly, and daily to monito the financial health of the business. Some of the reports that you need to consider include:
- Daily Sales Report: This is a full overview of a breakdown of the day’s transactions of a restaurant. This report is generated automatically by the POS system, but you can also feed the data into an Excel template. The main components of the report include gross sales, deductions, and payment breakdown. The gross sales are the total figure billed to customers in a day for food, beverages, alcohol and more. On the other hand, deductions are the items that affect the total amount received. This could be discounts, coupons, and comps. Payment breakdown are the details about the way customers paid their bills, including cash, card, and discounts. Essentially, the daily report shows how much the restaurant has made and spent that day.
- Chart of Accounts: As mentioned earlier, the chart of accounts keeps track of every financial aspect of your business. It categorizes the money that the restaurant has spent and received. Each section of the chart relates to a specific type of high-level transaction. This may include the expenses, revenue, liability, assets, equity, and cost of goods. Then, each of these categories is divided into smaller ones like staff ages, meat costs, marketing, alcohol costs, laundry, utilities, and more. For instance, you may have an account for meat purchases and another for dairy purchases in your Expenses section. The chart of accounts provides a clear sense of the restaurant’s financial health, and it may be requested by investors and shareholders when they want to find out the financial standing of the business.
- Profit and Loss (P/L) Report: The Profit and Loss report provides a short overview of the business overall performance. Also known as the income statement, statement of operations or statement of earnings, the report shows whether your restaurant is making money or losing. Depending on the size and type of your restaurant, you can prepare a P&L report weekly, monthly, quarterly or yearly basis. The report is dividing into sales and costs sections. While the sales are the income generated by the restaurant, the costs are the expenditures incurred (COGS, labor, and operating costs). At the end of the report is the profit or loss, which is calculated by subtracting costs from the sales. The P&L report shows the overall restaurant profitability health check and can be used to drive important business decisions like cutting costs, changing business strategies, and identifying ways to generate more revenue.
- Key Performance Indicators (KPI) Dashboard: The key performance indicators (KPIs) are metrics that show whether the business is hitting its targets. Restaurant managers with multiple location use KPIs to track the performance of each branch and measure it against the overall performance. Although a POS system can help in this, it is also possible to build a dashboard. However, this option is more hectic and requires a lot of input from you. Some of the most popular KPIs that restaurant managers track includes sales per head, sales per labor hour, COGs ratio, RevPASH, and lease as a percentage of sales.
As you seek to improve the financial health of your restaurant, make sure you are focusing on the right data. With so much information to collect, you may be overwhelmed on what to focus on. By analyzing your accounting reports, this is likely to be easier, enabling you to reach your financial goals.
10. Finding the Right Accounting Partner for Your Business
The importance of accounting to a restaurant, or even a food truck is quite evident. It is the function that keeps track of your finances and makes sure your business is financially health. However, you may lack time for doing the accounts yourself or tracking each and every detail. That’s where an accounting partner comes in: to help you with the accounting aspects while you focus on growing your revenue streams. You may also consider integrating an accounting software to automate some of the processes. As you search for the right accounting partner, consider the following:
- Whether you need a bookkeeper or a fully-licensed CPS
- Find a partner who understand modern accounting systems and technology
- Look for someone with a background of working in restaurants and cafes
- Look for a partner that understands your business goals and speaks your language
- Find out if the potential partner has a verifiable track record of delivering results
Accounting for restaurants can be daunting. But it doesn’t have to if you choose the right approach. Invest in the right restaurant accounting software and professionals to manage your financials in a effective and streamlined way!
If you’re looking for more information on restaurant accounting or POS software, check out these additional resources below:
iPad POS Systems: The Ultimate Guide (With Additional Reviews). iPad POS systems are being considered the future of customer-employee interactions. Learn more about them here.
5 Restaurant POS System Costs to Consider (Before You Buy). There are several types of costs that you should consider before investing in a POS system. Explore what those are in this helpful article.
Restaurant Point of Sale. Learn more about Lavu’s restaurant POS system, which can integrate with accounting software, as well as a variety of other software types.