Restaurant Bookkeeping Made Simple

eating at nice restaurant

Restaurateurs are good at running restaurants. What they are less skilled at is managing the books for their store.

In order to keep the books like a well oiled machine, 5 things are necessary.

1. Chart of Accounts
2. Point of Sale
3. Payroll
4. Cash Control
5. Inventory Count

1. Chart of Accounts: First things first, the restaurant must have a defined, and simple, chart of accounts. Often, the owners want an account for everything. Information overload takes attention away from the important areas. Have your sales broken down into 4 main categories, Food, Beer, Liquor, & Wine. Likewise, have your Direct Costs broken down to match – Food, Beer, Liquor, & Wine. Break your payroll down by Front of House, Back of House, Management & Owner. Maintain your Rent, Utilities, CAMs & Security as Occupancy Expense. For the Operating expenses have broad categories. Differentiating between marketing, advertising, & digital marketing is a fruitless effort. Combine similar expenses in broad categories that allow you to focus on the big items in the business.

2. Point of Sale: Have a cloud based point of sale system. Cloud based POS systems are quite robust, and allow for all sorts of ad hoc and on the spot reporting. The POS is your go to in order to understand sales trends. Ensure that the POS accounting reports are setup to match the Chart of Accounts. This creates a seamless transition from POS to books.

3. Payroll: Work with a payroll system that is robust for the restaurant industry. If the payroll provider does not track the FICA tip credit, turn and run! The FICA tip credit is a significant savings to restaurant owners. In addition, ensure that the payroll provider can run departmental payrolls (i.e. Front of House, Back of House, etc). Without departmental payrolls, you cannot see how much you are spending in the areas of your restaurant.

4. Cash Control: Maintain a daily cash report. This cash report should be tied back to drawer balances and safe balances. For any ‘paid-out’ expenses, ensure the amounts are recorded and receipts are attached to the report. Deposit cash nightly. Do NOT payout tips from the drawer. Have all credit card tips paid out on employee paychecks. Paying out tips from the drawer is risky and in effect provides a short term loan to the employee.

5. Inventory Count: Inventory is the restaurant industry weak link. There are plenty of software companies that claim they help with inventory, but the reality is, it all comes down to you and your store. You have to take physical counts and update the system. Since the biggest concerns are spoilage, waste and theft, take your inventory count monthly. This will create a rhythm to updating your inventory and cost of sale, while also providing an indicator or waste or control. Manage inventory by the percentage rather than worry about that single slice of cheese.