There are so many things to think about and take care of in the day-to-day operations of your restaurant that many times one of the most important aspects of running a successful business falls to the bottom of the list…restaurant accounting.
Most people hate dealing with numbers, yet they struggle along trying to do their own books because the last thing they want is another bill to pay each month. However, the price you pay to a qualified restaurant accounting firm will save you thousands of dollars in the long run.
How does restaurant accounting differ from other business accounting? In many ways it’s similar, but the restaurant business puts even more demands on your accounting system, and whether you are a start-up or a well-established business, your needs will always be in a constant state of flux. You need to be able to stay on top of every food purchase, employee expense, utility bills, insurance, state and city licensing fees, vendor statements and so much more.
It would be much easier if you had a widget store that just bought one type of widget for “X” cost and sold it for one retail price, but this is certainly not the case in the restaurant business. Your food costs alone could fluctuate on a daily basis if you are not locked in on your price.
Cash Flow: This is something that can quickly unravel your finances if you don’t stay on top of it. Cash flow sounds simple enough. It is the act of keeping track of all forms of money that come into and go out of your restaurant. The balance of sales and expenses is not unlike that of a juggler in the circus, always balancing items and hoping none fall out. Estimating future cash flow tends to be a guessing game with the ebb and tide of slow and good times at your establishment. As in any business, you strive to have more money coming in than going out, however with the ups and downs of market prices for food and supplies, and the whims the customers, it can sometimes seem like an unattainable goal.
Record Keeping: This is one of the most important things you can do to help in keeping your restaurant solvent. If you do not keep accurate records of all monies in and out, you are setting yourself up for financial failure. Your income includes all cash, credit/debit card and check sales received. All outgoing expenses should be accompanied by receipts and invoices. If you get in the habit of doing cash sales with some vendors and do not get receipts for the items, this can seriously hurt your bottom line when tax time rolls around.
Inventory Control: “Control” is the key word here, and if you don’t keep your inventory in control, your chances of success are diminished greatly. The inventory for your restaurant includes all supplies, products and ingredients you have on hand to create your menu items. Inventory is crucial to managing restaurant accounting because it is the cost factor which will have great importance in whether your outcome is a profit or a loss. You must constantly stay on top of your inventory so that you will quickly be alerted to anything out of the norm.
Profit & Loss Statement: Your profit & loss statement, or P&L, serves to summarize income, expenses and inventory and it details your total profits and losses over a period of time. It’s best to prepare weekly P&L statements since this makes it much easier to track numbers and see what areas need improvement. Your P&L statement should include information relevant to your cash flow, including sales and labor expenses.
There is much more to running your restaurant than just preparing great food. If only it were that simple, but unfortunately it’s not. The restaurant accounting aspect of your business can be over-whelming to an already busy owner. Using a qualified restaurant accounting company will save you time to devote to the things you love, like cooking and keeping your customers happy. They will stay on top of your restaurant accounting and help you to keep your restaurant running smoothly for many years to come.
