Restaurant Management Tips

Know these five restaurant accounting practices to be in control of your business’s profitability and budget.

As the owner or manager of a restaurant, when you’re aiming to grow profitability, accounting is an area where you need to be comfortable. It might be considered the most dreaded part of running your business, but to be profitable and to manage the money, there’s no way it can be avoided. Even if you hire outside accountancy assistance, it’s wise to have a strong understanding of the basic accounting practices for restaurants. If you have a restaurant POS, you already have a healthy support system that you should be utilizing.

5 Concepts of Restaurant Accounting

Cost of Goods Sold

Even if you’re new to the restaurant industry, if you have made a purchase order, you’re already familiar with the cost of goods sold (COGS): It’s the amount you spend on all ingredients (and that’s it, this figure doesn’t show how much is spent on labor to prepare and deliver the food or drinks). If you don’t know your COGS figures, this is the essential accounting practice to learn first since all the profitability of your restaurant boils down to the COGS.

See the six ways to control your COGS here, and if you find out that the menu prices aren’t right, learn how to price your menu in three steps.

Unavoidable Restaurant Expenses

Every foodservice operator has three fixed expenses:

  • Restaurant Labor—The cost of all employees on the payroll in management, FOH, and BOH.
  • Occupancy Expenses—These are the costs of existing in a brick and mortar location (or food truck), including rent, property taxes, and insurance. Some utilities may also be fixed costs depending on your plan with the energy provider.
  • Operating Expenses—The cost of everything else it takes to run your restaurant that isn’t COGS, labor, or occupancy related, such as marketing, tablecloth dry-cleaning, and dishware.

There are also variable expenses foodservice operators will need to consider in accounting:

  • Direct labor – Hiring for maintenance to be performed on a restaurant or food truck can vary depending on the type of work required.
  • Commissions
  • Taxes – Taxes will vary based on factors that accounting programs and reporting can help configure and calculate.
  • Operational expenses – These are costs related to the support and organization of a business on an everyday premise. The all-out working liability for an organization incorporates the costs of products sold and working costs such as utility payments.

Due to the volatility of variable expenses and contrasting changes they can have from month-to-month having documented reporting and screening of these costs is crucial to keeping your business afloat. Use our restaurant management software to keep an eye on variable costs and study their changes. They can diminish or increment quickly, cut your net revenues and result in a precarious shortfall, or show a substantial gain to your profit depending on the variables in place.

Knowing how much your restaurant or foodserv