Lavu Management - Restaurant Accounting Reports

Restaurant accounting is undoubtedly one of the most important administrative functions of a restaurant. It involves taking control of your accounts and making sense out of your business financial information. To ensure you get the best out of your financial information, you should work closely with your accountant to generate financial reports in a consistent and timely manner. Any delay in reporting can have dire consequences on your business operations and can be extremely costly in the long haul.

Although you may want to focus more on the restaurant operations side of things rather than understanding the complex nature of restaurant accounting, understanding this is equally important. You need to know what the numbers mean, what they reflect in your business, and how you can use them to improve your business. Using a tool like Sourcery, you can easily extract data from your accounting software and use it to generate most of these reports. In this article, you will learn about the various accounting reports that your restaurant should keep.

Daily Sales Report/Everyday Report

One of the most important accounting reports that you should keep is the daily sales report (DSR). Every restaurant owner and manager needs to review this report on a daily basis to get a picture of how the restaurant is performing. The report provides valuable information on the restaurant’s sales, taxes, tips, discounts, credit card fees, refunds, comps, cash short or over, and more. In other words, it provides a snapshot of day to day events and what they mean financially.

One way of generating more useful DSRs is simplifying your restaurant point of sale categories to ensure every aspect is accurately recorded. An effective daily sales report should provide the following information:

  •     Daily sales comparison: You should be able to compare your sales today with what you had yesterday or a day like today last week. When you factor in events like holidays or a change in weather, you can explain why your restaurant is performing in a certain way.
  •     Employee tip percentage: The tip percentage is important in showing how customers are satisfied with the services they receive in your restaurant. If you report a high tip percentage, it may indicate that your servers are giving away freebies. However, a low tip percentage shows that your restaurant is offering poor service.
  •     Cash short or over amount: Since cash is everything in the management of a business, any missing cash should be investigated and accounted for. If your business is missing $2 per day, it means you are losing more than $700 yearly. Daily sales reports show whether there is any cash missing so you can trace it back to the cause.

Chart of Accounts (Weekly, Monthly, Yearly)

The chart of accounts is an important record for any restaurant. It categorizes the money that the business spends and receives into specific accounts.

Chart of Accounts

Income Statement Accounts       Operating Expenses      Operating Revenues

      Non-operating Expenses and Losses

      Non-operating Revenues and Gains

Balance Sheet Accounts       Assets      Restaurant Owner’s Equity



Preparing the chart of accounts involves recording high-level transactions like assets, liabilities, expenses, revenue, equity, and cost of goods sold. These categories are further divided into smaller subcategories. For instance, the expenses account may be subdivided into alcohol costs, meat costs, laundry, wages, and utilities. The chart of accounts is important because:

  •     It gives an overview of the major restaurant financial reports, including profit and loss statements, balance sheets, and cash flow reports.
  •     It gives a sense of the restaurant’s financial health, helping to know how your business is making and spending money.
  •     It provides a high-level point of reference to compare the restaurant’s numbers with the industry averages while keeping track of expenses.
  •     Chart of accounts is a necessary document that investors and shareholders may ask to get a clear picture of the financial standing of your restaurant.

Cash Flow Forecast (Weekly Report)

Your cash flow should be recorded on a weekly basis to indicate the amount of cash that you received or paid during the week. For a restaurant to run smoothly, you need to have enough money in the bank account for paying suppliers and employees. By creating a cash flow forecast for the week, you will determine how much money you need and how to raise it. This is a critical step in preventing the headache and embarrassment that comes with bounced checks. A weekly cash flow forecast will be comprised of the following:

  •     Expected cash outflow: This is the amount of cash that will be paid by the business during the week. You need to consider your payroll, non-expense cash flows like loan payments, and recurring expenses like software subscriptions.
  •     Expected cash inflow: This is the amount of cash received from sales. Remember, money is not deposited into the bank account immediately after a sale has been made. This means that looking at the sales numbers will directly tell if you have enough money to cover the expenses for the week. You need to determine the actual cash that has been deposited into the bank account.
  •     Accounts payable aging report: When looking at the cash flow in your business, you should be able to determine the amount that will be used to pay off outstanding bills. This includes deciding which suppliers to pay to reduce the debt on the accounts payable aging report.

Flash Report (Bi-Weekly Report)

A flash report for a restaurant is a condensed profit & loss statement that comes with several other metrics. The purpose of the report is to help the owner or restaurant manager make purchasing and scheduling decisions for the upcoming week. Although it is just a simple report, it plays an important role in restaurant accounting. The report is comprised of the following:

  •     Sales comparisons: The flash report allows you to compare your current sales volume to a similar period last month or last year. If your sales last year were higher than they are today, it may signal a problem that you need to resolve quickly.
  •     Labor cost percentage: The flash report is effective in calculating and tracking your labor cost percentage across a given period. By showing both the FOH and BOH variable cost to sales ratio, you can determine whether you are under- or over-staffing your restaurant. This is also a great way for your managers to find out whether they are meeting their targets with the current workforce.

Monthly Performance Report (Monthly Report)

A monthly performance report is prepared to show the performance of the restaurant over a period of one month. Part of the report is to reconcile your credit card and bank statement to have a clear picture of the reviews that you have generated over the month. The monthly report provides information regarding the following:

  •     Trend analysis: The report shows trends in your business performance both in the short and long-term. You can tell how your business is evolving by using this analysis and continuously making improvements and changes in underperforming areas.
  •     KPI analysis: The analysis of your key performance indicators (KPIs) is crucial in determining whether you are meeting the targets of your business. KPIs form an important tool for tracking and increasing restaurant efficiency, turnover, and profitability. Each restaurant KPI should be assigned to a team member that is responsible for making sure the business hits the target. For instance, the chef may be responsible for food cost, manager for maintaining variable labor cost percentage, and the chief bartender for beverage cost.
  •     Cash flow analysis: The analysis of your cash flow never stops and should be ongoing across different time periods. It allows you to determine how cash flows in your business and the causative factors. Factors like capital expenditures, owner’s draws, and loan repayments can affect your business cash. Although they may not affect your accounting profit, they do have a great impact on your cash flow. Conversely, factors like depreciation have no impact on your cash flow and yet they affect the accounting profit.
  •     Budgeted cost vs. Actual cost: An important part of determining the direction your business is taking is comparing the actual cost that you incur versus what you budgeted. If you are spending more, it may signal that your operations are not efficient enough. Therefore, you need to take measures to improve efficiency and reduce cost percentage.
  •     Condensed financial statements: Your restaurant accountant will usually provide expanded financial statements with information overload that may be overwhelming to analyze. With the monthly performance report, you get condensed reports on specific areas that you want to analyze. You can compare the various elements and make the appropriate decision that you want to.

Profit and Loss (P/L) Statement (Monthly, Quarterly, Yearly)

The profit and loss statement shows the profit or loss that your restaurant has made over a given period of time. Some of the other terms used to refer to the profit and loss statement include the P&L statement, income statement, statement of operations, and statement of earnings. The statement reflects the sales of your restaurant and the costs incurred, reconciling items like food costs, sales volume, operating cost labor costs, and profits. The statement is important to a restaurant business because:

  •     It shows the overall profitability of your business
  •     It acts as a guiding post for driving your business decisions

Cash Flow Statement (Weekly, Monthly, Yearly)

The statement of cash flows or the cash flow statement shows how money came in and went out of your business over a given period of time. Any cash that comes into the business is known as cash inflow while any cash that goes out is known as cash outflow. When preparing this report, you list any cash that came in or went out of the business due to operations, investing, financing, and debt. The statement is important because:

  •     It shows the amount of money your restaurant has on hand, right now.
  •     It shows whether your operating cash flow can allow you to maintain or grow your restaurant operations, or whether you will need to seek external financing for the ordinary operations of your restaurant.

Balance Sheet (Quarterly, Yearly)

The balance sheet is a financial report that lists your restaurant assets, liabilities, and equity. While assets are the things that your restaurant owns, liabilities include what your restaurant owes others. Some of the assets include equipment, premises, inventory, and straight cash. On the other hand, liabilities include restaurant equipment loans and vendor bills. Equity is the net worth, or what is left over when your liabilities are subtracted from your assets. The goal is to keep this number positive because a negative value is an indication that your business will not be able to meet its obligations when they are due.

A balance sheet is an important financial report for restaurants because:

  •     It shows the actual financial position of the business at a specific period in time
  •     It shows whether you owe more money to other parties than what your business currently has
  •     It shows the business debt load
  •     The report may act as a warning sign that the business is in trouble

Revenue Report (Daily, Weekly, Monthly, Yearly)

This report displays the total expected revenue that your restaurant will make for a given period of time. It also shows how this revenue will be split between food and beverage. The tool is used as a projection tool when anticipating the amount of revenue that the business will generate in the future. The report also shows how realistic you are in setting your sales targets and evaluating operations. Some of the important information the revenue report should include is total revenue, average number of receipts and tables, average revenue per table, and average revenue per customer.

Controllable Costs Report (Daily, Weekly)

The controllable costs report records the restaurant expenses that can be controlled. The report is important in tracking food and beverage costs and labor costs. This allows you to calculate your prime costs and determine your restaurant operating margin. The controllable costs report allows you to conduct daily and weekly cost monitoring, track labor and food costs, and determine cost increases due to inventory or labor.

Concluding Remarks

While there are so many accounting reports that your restaurant should keep, some have a lot of importance in helping you track your cost and revenue. Depending on the purpose of the report, it can be prepared or generated on a specific period of time. Some are generated on a daily basis, while some on a monthly or yearly basis.