Bookkeeping for a Restaurant: The Total Guide
Like with any business, running a restaurant requires accounting, in the form of reporting, interpreting, and analyzing your revenue, cash flow, inventory, and income statements. The basic goal of accounting for your restaurant should be to document how to do bookkeeping for a restaurant all of your financial transactions and determine the health and performance of the business. Restaurant profit and loss statements (P&L) or income statements reflect the expenses, costs, and sales of your restaurant during a specific period of time.
This is where menu engineering comes in, enabling increased profits, reduced food costs, and minimized waste. Revenue is all the income a business receives in selling its products or services. Costs, also known as the cost of goods sold, is all the money a business spends to buy or manufacture the goods or services it sells to its customers. The Purchases account on the chart of accounts tracks goods purchased. Very small businesses may choose a simple bookkeeping system that records each financial transaction in much the same manner as a checkbook.
Learn How Industry Leaders Succeed With R365
Now on the next screen simply mark off your deposits and payments that cleared your bank on the statement until you show a difference of $0. With Shogo, if there are any errors it will hold back the journal entry until you update the accounting mapping. An example of this would be if you started selling a new item like retail, for example. If you create new items in your POS then Shogo will automatically detect this and email you to update your accounting mapping with the proper QBO category.
If you are not using financial reporting for your restaurant, then you are running your business blind. With such tight profit margins in the restaurant industry, it is important to analyze your financial reports on a regular basis. Restaurants should be looking at sales vs. cost of goods sold ratios as well as labor ratios.
Cash flow statement
You can choose between cash basis accounting and accrual accounting depending on your profit amounts. You’ll also need to keep constant track of inventory, food and pour costs, prepaid accounts, short pays and vendor credits, and tips. Use the accounting records on hand to show how much you earn from food sales, merchandise sales, or catering jobs. Find out how much revenue you make each day and ideally break them further into food and beverage categories.
Stay updated with the industry trends, consumer preferences, and emerging technologies to remain relevant and innovative in your offerings and operations. Regularly renewing and updating your licenses is crucial to avoid disruptions and legal issues that could impact the success of your restaurant. Use social media platforms to engage with your audience, sharing interesting content, promotions, and behind-the-scenes glimpses to foster community and attract new customers. Start by creating a professional website using a restaurant website builder. Incorporate features like online ordering to streamline the customer experience.
f. Gross profit
In the U.S., public companies are required to follow these accounting standards and procedures when putting together financial statements. The GAAP are issued by the Financial Accounting Standards Board (FASB), and establish the complete, consistent, and comparable nature of financial statements. These are items that have economic (or cash) value, such as your kitchen equipment, tables and chairs, and your building, if you own it. Even cash or money that you’re expecting (accounts receivable) is considered an asset.
It’s a good idea to set up an inventory management system that reduces waste and optimizes food cost. This will also help you avoid food surpluses and shortages, and instead strike a more accurate balance. Managing accounts payable effectively is crucial for maintaining positive relationships with your vendors.