Running a restaurant can be an incredibly exciting and rewarding endeavor. This comes at a price though, and for some, one of the most crucial elements of restaurant operation is overlooked – restaurant accounting.
Without proper accounting practices and a business strategy set in place restaurants fail. Aiming for profitability by serving as many customers as possible without any form of financial reporting may lead to revenue but rarely ever profit. So how can you as a restaurant owner guarantee long term success? This article will provide you with tips needed to ensure effective restaurant accounting.
Having an organized payroll system is one of the most essential facets of running any business. In the restaurant industry in particular, employees are often paid weekly and finding the time to manage all the accounts can be incredibly difficult. Outsourcing the process, on the other hand, is not only affordable but can be incredibly rewarding in the long run. Payroll laws are constantly changing, and any missed payment or incorrect procedure can result in a hefty fine for the restaurant. By allowing a professional payroll representative to manage your accounts, you will save hours every week, and guarantee that you are not in violation of any laws.
Making sure your restaurant is never understocked or overstocked is a very challenging task. With items that have short expiration dates it becomes a matter of scheduling as many deliveries and pickups as possible to stay prepared. So how is a restaurant operator expected to always be in the loop? Financial programs and resources such as table management systems can help forecast expected demand, hence ensuring the restaurant is always fully stocked. For example, if it becomes obvious through the table management software that weekends are always fully booked, extra inventory can be ordered for those days to compensate while not ordering as much on weekdays.
Point of Sales (POS) System
Restaurant accounting is not just confined to the office in the back, but rather, a lot of good accounting practices begin at the front of house. POS systems are used in restaurants to record any orders made by customers and to complete transactions. A good POS system though will allow you to track labor costs, inventory counts and different methods of payment as well as generating sales reports. Choosing the right POS system forms a link between the front of house and the back of house accounting system, making your daily invoicing much more facilitated.
Hire an accountant
If you are having trouble sorting out the finances for your restaurant, your best bet is to hire an accountant. Hiring an accountant can be incredibly beneficial for almost all restaurants whether big or small and can be useful even if you have an understanding of day to day bookkeeping. With an accountant, not only will the process become so much easier, but also they can also help with the more complicated processes such as interpreting your restaurants finances. If you are not able to hire an in house accountant, there are plenty of independent accountants or accounting firms that can help on a part time basis. Their services can include financial consultations, managing payroll, business projections, and advanced bookkeeping in addition to ensuring you are complying with any local financial laws.
Financial software is designed to make restaurant accounting as easy as possible for restaurant owners. There are a number of different programs to choose from and each has its own advantages and disadvantages. Below you will find a few examples that could make your daily accounting processes super simple.
Microsoft Dynamics GP puts the control over finances, inventory, and business information in your hands but also incorporating itself within your email and calendar.
QuickBooks is one of the most well-known financial programs around, and with the addition of QuickBooks POS it’s a no brainer for an all in one accounting solution. The software features a very useful startup financial planner which will allow you to forecast expected revenue and in turn provide you with estimated startup costs to help plan the future of your restaurant.
Restaurant Profit & Loss (P&L) Statement
A restaurant P&L is an essential way for restaurant owners to track a number of different financial metrics. Using this simple financial method, a record of revenue, food costs, operating costs, and labor costs can be compiled into one document. Some restaurants keep yearly updated P&L sheets, but it is recommended to be updated on a weekly basis.
One of the hardest tasks for restaurant operators to keep track of is daily sales. It is recommended for smaller restaurants to go as far as keeping track of sales in a spreadsheet after each shift in addition to at the end of the day. By doing so this helps in predicting busy shifts such that the necessary preparations can be made. It also allows you to anticipate which days of the week are busier than others to aid in scheduling staff. For most restaurants, a big chunk of daily sales depend on credit cards, and hence you need to get into the habit of closing out the transactions on a daily schedule to ensure you keep track.
For a restaurant to truly know how much money they have earned at the end of a period of time, they need to regularly add up all their expenses and keep all sales receipts. It is advisable to start off by paying bills at least once a week. Once you get a hang of the process, it might become obvious to you which sales need to be recorded more regularly than others. By setting aside half an hour every day, you can save countless hours at the end of the month.