Top 8 Restaurant Bookkeeping Tips

We are on our way to the 2nd half of the year and whoa, summer’s almost over in Lil’ Rhody! I only say that because in RI, summers go by really quick since they are here to stay for only about 3 months! Since summer is here, your restaurant business is probably so busy with reservations, parties & just a lot of good vibes! With that much fun, you can can’t forget about your bookkeeping…..believe me, most businesses do! Our busy season is from October to February because of the hind sight. We are here to help guide you before it becomes the end of the year. Now, we know that every business has their own way of dealing with their finances…..it might be to a spreadsheet or an accounting software – heck, we even know some that will write things down on a notepad and call it a day!

The most important part about bookkeeping is the record keeping. However, you decide to record your bookkeeping, there are a few things to take into consideration. There are many tips I can give you but here are the top 8 that will help your business grow and understand your business:

1. Use a Restaurant Bookkeeping Software

Utilizing one of the many restaurant accounting software options available will allow your business to better streamline its finances. And if you don’t come from a number crunching background, don’t worry — this type of software tends to be very intuitively designed so even someone new to the world of accounting can grasp the basics quickly.

Some bookkeeping software brands that specifically cater to restaurants can connect directly to your POS system. In fact, depending on how old your current system is, this might be a good time to upgrade your POS system too.

2. Build a Foundation

Every business needs somewhere to start and the Chart of Accounts is where every book of business starts. This is a list of your assets, liabilities, equity, income & expenses. This is the most important part of any business! The end result in a bookkeeping cycle are the financial statements, so you always want to ensure that the Chart of Accounts is in good standing. Here’s a sample copy of a Chart of Accounts for a Coffee Shop: https://docs.google.com/spreadsheets/d/1sqMfAtdWuWG-pQKxjOC1Vtitz49Fo_pp/edit?usp=sharing&ouid=110583898093682895729&rtpof=true&sd=true

3. Keep your Business & Personal Transactions Separate

By doing this, your balance sheet would look like gold to any banker or investor! When you start purchasing personal items from your business accounts, your equity is affected and that will change your bottom line. Most of my clients that are looking to finance or even sell their business needs to make sure that their balance sheet is pristine (which is comprised of assets, liabilities & equity).

4. Make Recording Part of Your Routine

Updating and reconciling your financial records is a huge part of the restaurant bookkeeping process. Not only will it give you a clearer picture of where your business is heading, but it may be able to help you identify some potential red flags, such as employee theft or major food waste.

A few metrics to keep in mind:

· A profit and loss statement should be done once a month.

· Counting inventory should be done at least monthly, but weekly is even better.

· Reporting on labor and food costs should be done once a week.

Getting into the habit of these best practices is often the hardest part. Just like your cleaning process and ongoing training programs, it’s all about repetition and making recording the financials a part of your regular routine as a business owner.

5. Automation

Having a cloud based accounting software like QuickBooks Online can simplify your bookkeeping or you can delegate this task to your trusted bookkeeper. Automation will help you with matching and categorizing transactions. We do not recommend using the “Auto Add” Feature in QuickBooks as you might have different products you buy from the same vendor and you will not see the transactions because of that automation.

6. Evaluate Inventory Costs

Unlike many retail industries, inventory costs for restaurants can fluctuate wildly, even from week to week. Maybe a drought has affected broccoli farmers. Or maybe disease has affected how much cod your fish supplier has in stock. It could also just come down to the fact that you’re ordering asparagus when it’s out of season.

However, if you make it a point to regularly evaluate your inventory costs, you can more confidently decide if you need to make changes to your inventory ordering, your menu prices, or your overall menu.

7. Prepare for the Unexpected

Always prepare for the unexpected and I teach my clients to do that with Profit First. This book teaches you a structured way of saving your money like the envelope system if you know what that is. It has helped many business owners, including myself, be profitable, understand cash flow & grow the business. Check out our monthly E-Newsletter to win a FREE copy of Profit First for Restaurants – we give one book away every month.

8. Hire a bookkeeper

Often times, small business owners find themselves focusing on activities that don’t directly affect generating revenue. Everyone wants to be a do-it-yourselfer but is it really helping your bottom line? Think about how much time you could save if this project was delegated to a professional? (That would be me :D )

Remember that keeping good records ensures that you comply with government regulations and helps you keep control over your finances.

A La Carte Business Advisors provides outstanding service to our clients because of our dedication to the three underlying principles of trust, service & empowerment.

Thank you all for reading!