Restaurant accounting can be a daunting task, especially for restaurant operators without an accounting background. For anyone who is busy growing their businesses, managing restaurant accounting on their own can be time-consuming and prone to human error.
But restaurant accounting provides essential data for making informed strategic business decisions, in the moment and long-term; it helps you oversee your finances and budgets, and provides insight into key decisions to reduce prime costs. Today, operators turn to restaurant accounting software that prioritizes streamlining the accounting process, accurately tracking key metrics, and automating workflows.
7 Restaurant Accounting Tips
With these restaurant accounting tips, you can begin to optimize your accounting system to gain a better understanding of your restaurant’s financial health—and make changes that add to your bottom line.
1. Choose Restaurant Accounting Software Fully Integrated With Your POS
Your point of sale (POS) system tracks critical information about your sales and labor. However, sometimes extracting POS data can be difficult. Manual POS data entry is error-prone, and POS and accounting systems that don’t share a common database require time-consuming manual or third-party imports.
When your POS connects seamlessly with your restaurant accounting software, you are able to automate the collection and organization of accounting data. POS integration means accurate, timely sales and labor data tracking that can help you optimize everything from recipe costing and inventory management to scheduling and payroll.
2. Manage Inventory for Accurate Food Cost Accounting
In a busy restaurant, tracking inventory can seem like an overwhelming task. However, inventory management is not only essential for day-to-day operations—accurately tracking your inventory helps you understand your food cost accounting as well.
Since your POS tracks all sales, full POS integration with your restaurant accounting software helps you understand the flow and movement of all ingredients that come into your restaurant, and what leaves through sales or food waste. This allows you to determine where your gaps are in your bottom line, using insights from past inventory to strategically adjust future food costs.
Recipe costing, informed by data pulled from your POS, tracks the usage and yield from individual food items. This calculation allows you to make data-driven menu engineering decisions and other inventory adjustments.
3. Track Your Profit & Loss (P&L) Statement Frequently
Your P&L statement, also known as your income statement, is one of the most essential restaurant reports. Your restaurant P&L tracks your sales and costs, including information about your sales quantities, food, labor, and operating costs, and your profit.
While you may think you need to only run your P&L once a month, a daily, or at the very least weekly, P&L helps you stay proactive in your restaurant accounting. Monthly P&Ls provide outdated, old information that is difficult to act on. By running your P&L daily, you have insight into the day-to-day strengths and weaknesses of your business. Up-to-date information allows you to take steps in the moment to effectively address any immediate problems before they become persistent or costly.
Running your P&L frequently requires a robust restaurant accounting system that is fully integrated with your POS, allowing you to easily and automatically draw information about key food, sales, and labor metrics.
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4. Focus on Calculating and Reducing Your Prime Costs
Your prime costs are calculated by adding together what are typically your two largest costs: total Cost of Goods Sold (CoGS) and total labor costs. As opposed to fixed costs like rent, food and labor costs are where you can make the most significant cost reductions. Lowering your prime costs increases your bottom line.
By using your restaurant accounting software to track key metrics about actual versus theoretical food cost variance or efficient staff scheduling, you are able to understand the trends behind these two key costs. Accurate and timely financial information about your prime costs can help you make informed accounting decisions about everything from controlling food waste to optimizing labor hour productivity.
5. Streamline Accounts Payable (AP) Through AP Automation
Managing accounts payable is one of the most time-consuming tasks for busy operators. However, some restaurant accounting systems now offer AP automation as part of an all-in-one platform. You can save time by leveraging tools to capture invoices, route them through a customized workflow for approvals, send payments directly and securely, and even add automated payment options. AP automation ensures that bills are accurately categorized, and payments don’t slip through the cracks.
6. Prioritize Reports and Forecasting
Access to financial reports, like the above-mentioned daily P&L statement, can enable you to make proactive business decisions at both the corporate and store level. Whether monitoring real-time financial performance, analyzing menu engineering decisions, or identifying historical sales trends to forecast future demand, accurate reports allow you to drill down into the real-time, nitty-gritty accounting details.
To get the most out of your restaurant accounting reports, consider choosing software that provides helpful report templates out of the box, as well as customizable templates that you can personalize to fit your business. Encourage accountability by scheduling these reports to be automatically delivered to your inbox or disseminated to your management team at scheduled dates.
7. Use Restaurant-specific Accounting Software
With tips, complex labor and inventory metrics, and weekly reporting periods, the restaurant industry has many unique accounting characteristics. Broad, general business accounting systems may not be adequate for the complexities of restaurant accounting.
Consider choosing restaurant-specific accounting software for your business. Not only will restaurant-specific software help you keep an accurate eye on your finances, it will ensure that metrics will be relevant to your day-to-day decisions. With reports that “speak” restaurant and integrations that enable automations, restaurant-specific software can help you track and understand the full picture of your business.
The Bottom Line
With the right tools and systems, you can use your restaurant accounting data to make strategic decisions and grow your operation. To learn more about the Restaurant365 cloud-based, all-in-one accounting and operations platform, visit the R365 website.