These services allow you to automate your accounts payable and get a more accurate COGS figure. Once you're behind on your restaurant accounting, it is difficult to get caught up. Unlike many retail industries, inventory costs for restaurants can fluctuate wildly, even from week to week.

Apps typically include features such as sales tracking, expense tracking, and financial reporting, making it easy for restaurants to stay on top of their accounting. Restaurant accounting is unique because of the language of hospitality finance. It’s restaurant bookkeeping crucial to have an effective accounting system in place for your restaurant to see the success you’re after. Keeping a watchful eye on the restaurant bookkeeping process is especially important for restaurants because of their slim profit margins.

Controllable Cost Report (prime costs):

Accrual accounting records financial transactions as they happen, whether you have received payment or not. A POS system does a lot of heavy lifting in a restaurant, but it’s prone to user error. When you enter menu items into your POS, check that they’re coded correctly to ensure accurate food and beverage costing, but even more so for tax tracking. This simple but vital process involves your POS software recording each sale you make for the day.

EBITDA represents earnings that are a result of operations only, while stripping away the effects of financing, accounting, and capital spending on your restaurant’s earnings. Cost of goods sold is a KPI that indicates how well you’re pricing your products and controlling your inventory. CoGS represents the actual cost of food and beverage used to produce your food and beverage sales. By keeping tabs on your CoGS ratio, you can take action to reduce and contain your inventory costs.

Should I Outsource My Restaurant Bookkeeping?

Although there are many options, most restaurant and retail businesses choose the calendar year accounting period. Restaurants usually run seven days a week and might have some days with more sales. Opting for four and five-week periods, totaling 13 accounting periods gives you a more accurate comparison. When doing restaurant accounting also compare your performance over time.

As a new restaurant owner, don't pressure yourself to become an accounting whiz. Learn these three important processes first; the rest will fall into place over time. Mastering the following processes helps you keep accurate financial records, get your staff paid accurately and on time, and ensure you know what bills the business owes and when they're due.