Yes, you want the best food. Yes, you need drive and ambition. Yes, you need to know how to please customers. But running a restaurant requires a lot more than killer food and warm smiles. You need obvious business acumen, and of course, the need to make smart, viable financial decisions to keep your restaurant successful throughout the year.
The following three tips are just that – tips. This short blog post shouldn’t be your only resource of restaurant financial advice, but rather a starting point for a deeper discussion with your accountant. That said, let this post be the catalyst for financially solvent decisions to bring your restaurant’s revenue to another level.
Speaking of which…
Know the difference between expenses, profits, and revenue
Having a ledger simply isn’t enough anymore. With the sheer amount of data available in modern restaurant POS systems, it’s not unacceptable not to keep a simple account of your spending. Instead, you need to monitor the obvious.
- Labor costs
- Food costs
- Other operational expenses
…and the not so obvious…
- Seasonal fluctuations
- Coupon use/losses
- Employee absence/turnover
- Local competition
With a modern restaurant POS system, you can gather, sort and analyze this data to find the true cost of operating your restaurant. In the past, underestimating weekly income falsely demonstrated a restaurant was losing money. Now, thanks to detailed restaurant analytics of every aspect of a restaurant’s revenue/spend, it becomes crystal clear as to what areas of your business are thriving, and which need attention.
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Use a classic profit/loss chart
No, we don’t mean breaking out a large, college-ruled, tricolored ledger book. But today’s restaurant accounting software allows users to organize all financial information into a concise, well-organized document, complete with detailed breakdowns of each entry.
When consistently organized, these profit/loss breakdowns can easily be compiled into monthly and yearly statements of food costs, labor costs and overall operating expense.
If you plan on manually entering financial information for your restaurant, it might be helpful to hire an accountant that specializes in restaurants and service industry businesses. Having these professionals in tow helps ensure your entries are accurate, and your expectations are, as well.
Invest in a restaurant POS system
You didn’t think we were going to ignore the obvious, did you? Of course, a restaurant POS system should be a strong consideration for businesses looking to find pinpoint accuracy within books and financial records. Most, if not all, modern POS systems allow owners to track restaurant inventory, labor, payment types, traffic patterns, customer preferences, alongside a laser-detailed collection of sales data.
And then it organizes it, runs reports, and provides unparalleled insights into every aspect of your business. Because, like we mentioned earlier, precision and accuracy are the only ways to balance your restaurant’s financial picture.
You might feel a major investment into a POS system goes against your otherwise smart spending nature. But make no mistake, once you find out how to stop hidden losses, and maximize available profit streams, you won’t be thinking about the small upfront investment in a restaurant POS system.