A restaurant can be a hectic place. Crowds of hungry patrons, food sizzling on the grill, and the phone ringing off the hook with take-out and delivery orders can really keep a restaurant manager on their toes.
With everything that demands your attention during your day-to-day operations, staying up-to-date with your accounting and bookkeeping priorities can be challenging. Fortunately, we have some helpful tips that can keep you organized, save you a significant amount of time and ensure that your books are always current and accurate.
1. Use the right accounting software and POS to streamline your restaurant accounting
One of the most important things you can do to make sure your bookkeeping process is kept as simple and straightforward as possible is to use the right accounting software.
Cloud-based software will allow you to integrate all of your systems, creating an easy flow of data between every program that you use. It also provides the advantage of being able to access your essential data from anywhere, even while you're on the go.
QuickBooks Online is one of the most highly recommended cloud-based software programs. It easily integrates with many different restaurant POS systems, plus it is easy and efficient to use.
2. Stay up to date on your bookkeeping
Bookkeeping may be a tedious task, but it is vital to the success of your business. Bookkeeping allows you to track all of your income and expenses, providing you with detailed reports about the current status of your business and projections about your operations in the future. Keeping accurate records allows you to track your restaurant's revenue, food, labor, and operating expenses. It will also keep things organized when you have to pay sales tax or liquor excise tax.
Bookkeeping tasks for your restaurant will typically include:
- Tracking expenses
- Tracking daily sales and cash deposits
- Paying vendors
- Payroll and tips management
- Monthly bank and credit card reconciliations
- Generating financial statements such as profit and loss, balance sheets, and cash flow statements.
3. Consider outsourcing your bookkeeping and payroll
Unfortunately, many restaurant owners take on their bookkeeping as a means to save costs but too often, these accounting tasks fall to the very bottom of the priority list. This leads to chaos and confusion, and inaccurate records that can be difficult to rectify.
Outsourcing your bookkeeping is an excellent way to help you save time as a restaurant owner, plus it gets you the expertise you require to ensure that all of your numbers are accurate and reliable.
Outsourcing to an experienced bookkeeper ensures that your books are always up to date, giving you constant visibility on your finances. It also helps you stay current on changing payroll legislation, which can often be confusing.
4. Track your prime cost
There are two main types of expenses for restaurants: fixed costs and prime costs. Fixed costs include things like rent, equipment leases, insurance, business licenses, and permits. These are the costs you have little control over and make up the smallest percentage of your overall expenses.
On the other hand, prime costs make up the majority of a restaurant's expenses and consist of items such as food costs, beverage costs, salaries, payroll taxes, and benefits. Tracking prime costs is important because they are the best indicator of a restaurant's profitability and show how well the business is being managed on a day-to-day basis. If a company is well run, prime costs should stay within 60%-65% of sales.
It is vital to monitor your prime costs on a weekly basis to track any fluctuations in expenses and identify areas where you may be able to cut unnecessary costs. For example, if your labour costs are high, you may want to consider hiring more part-time contract staff to avoid having to pay extra payroll taxes and benefits.
Tracking your business’s prime costs is key to determining how much revenue you need to break even or make a profit.
5. Manage your food costs
Food costs are a component of a restaurant's prime costs, and keeping a close eye on these expenses is essential to ensure profitability. A restaurant's food costs can fluctuate based on many factors, including seasonality, poor weather, or natural disasters.
A restaurant needs to regularly monitor food costs and keep them to a pre-specified percentage of your cost structure. This allows you to review these costs and decide whether you need to make changes to your ordering quantities, raise menu prices or change your overall menu to only include those ingredients that have fewer price fluctuations. You must also evaluate each menu item to ensure that every dish is profitable.
6. Review your finances regularly
Taking a thorough look through all of your finances on a regular basis will give you a good insight into your restaurant's performance. The profit and loss statement is an important financial report to review regularly in order to understand your profitability and the financial health of your business. It is also important to concentrate on your prime, food, and labour costs and find innovative solutions to manage these expenses.
By analyzing different revenue sources, you can determine profitability and decide what areas of the business are most successful. Take a detailed look at how much you earn from food sales, alcohol sales, merchandise purchases, and catering, for example, and look for methods to grow the most profitable areas and improve on those that are lacking.
Since the restaurant industry has exceptionally tight margins, it's crucial that you gain visibility into your business performance. Bookkeeping is a vital part of your restaurant business, and it will help keep your numbers organized and visible. If you have questions about the best ways to manage your restaurant's books or if you need professional assistance with your bookkeeping needs, Enkel is here to help.
Contact us for more information on the services we offer and how we can help you become a more successful restauranteur.