A restaurant business, like any other, relies on good accounting to ensure growth and profitability. Keeping up with the restaurant accounting process can help with financial reporting and overall business planning. We have highlighted three tips that can help streamline your restaurant accounting.
1. Be Aware of Your Overhead Cost
Ultimately, every restauranteur wants to make a profit, but this is only possible if you understand the basics of income and expenses. Many too often, people start businesses they tell themselves they are truly passionate about. So they go on persevere losses for a couple of weeks and even months. But this cycle can go on for so long before they run out of capital and the creditors come knocking.
The truth is, growing a restaurant business requires a good grip on accounting. This begins with calculating your overhead so you can adjust pricing appropriately to suit your target marketing. Knowing how much you spend or wish to spend in your restaurant can help uncover what you are doing wrong or right. For instance:
- Is your restaurant in the right location serving the right market?
- Can the target customers afford the current or adjusted pricing?
- How long can it take to break even and turn a profit?
Perhaps answering these questions isn’t straightforward, but understanding your expenses and expected income will steer you away from trouble. Some major expenses include rent/mortgage payments, marketing budget, utilities & bills, taxes, labor costs, and food and non-food supplies.
Once you have a record of how much you spend per month, you can calculate daily spending and how much you must sell daily to break even. This will allow you to set reasonable menu prices for your business and your customers. Similarly, you want to pay attention to the variable costs, market competition, and your unique offerings.
2. Leverage Point of Sale System
One of the mistakes restaurant owners make is taking shortcuts in how they operate their businesses. For instance, a point of sale system (POS) will only cost you a couple of thousand dollars but will save you a lot more in return. With such a system in place, you’ll minimize theft and asset loss both from employees and customers. A rule of thumb is to maximize this system to yield the most value for your business.
It’s often advisable to work with competent POS system programmers who will customize the software for your unique business. That way, you’ll understand the ins and outs of the system, how it operates, the loopholes, and management best practices. Ideally, this software can help minimize employee and bookkeeper theft. You can make several customizations; for instance, it’s possible to program the system to request manager approval to open a cash box/drawer or apply a discount to a ticket.
The POS can also report the daily cash transactions, which should add to the daily sales summary report. If the cash collected doesn’t tie to what’s reported on the point of sale system, you can easily point to the cause of the problem and hold some people accountable.
3. Outsource Your Accounting
Now that you know more about the overhead costs, have modified your pricing to ensure profitability and have even taken measures to prevent losses; next is to take care of your accounting, payroll, and taxes. For a relatively small restaurant that’s just getting into business, handling the accounting in-house can be a way to minimize expenses and better understand the business. However, as the business grows,
outsourcing becomes inevitable.
Not only will you save money/time, but you’ll also benefit from professional accounting services. Some accounting firms offer top-tier accounting packages at reasonable pricing, thanks to good economies of scale. That said, our expert accounting professionals at Gurian CPA have you covered whether you need payroll, tax, or everyday business accounting. We have deep knowledge of the restaurant accounting
sector, and we’d love to enlighten you so you can build a successful business.
Take Action Today
Market uncertainties, stiff competition, and constantly changing tax laws are some factors every business faces. However, the restaurant industry is even more complicated, thanks to additional tax rules and several accounting complexities. To take your restaurant or hotel business to the next level, you want to pay attention to the accounting tips we’ve highlighted above. Remember, now is a perfect time to take
action.
