As a restaurant owner, I’m sure you’ve put tremendous effort into developing and refining your menu, creating just the right ambience, and building a staff that provides the very best service. But it takes more than all of those elements to make a successful restaurant. You can’t forget that you’re running a business, and that you need to turn a profit. I don’t need to tell you that restaurants have a reputation for being the type of business that can either do extremely well, or fail dramatically. We’ve all heard it said that 90% of restaurants fail in their first year of business. Whether or not that statistic is accurate, it still stresses the point that you need to stay on top of your restaurant’s finances, and that means you need to manage your books properly.
Doing accounting seems like an overwhelming task, when you really need to be putting your energies into perfecting your food and service, and you’re not trained in finance. But really the basic idea of accounting for restaurant is really pretty straightforward. You need to keep records so that you know what your revenue is, where you’re spending it, and whether you're making a profile. Of course, that’s a bit of an oversimplification. Here are a few things you should know so that you can keep the kind of records that will help your restaurant succeed:
- Track your expenses
You know what your expenses are, generally speaking - food inventory, wages, rent, insurances and so on. But you need to record and organize them properly, so you can see how much you’re spending in each category, by week , by month, etc. Once you have a clear picture of what you’re expenses are, it will be easier to get an idea of how much you need to earn in order to make a profit.
- Track your income
This is no less important than keeping records of your expenses. But not all restaurant owners keep accurate records of revenue, especially those who do a lot of cash business. Still, knowing how much revenue you have, and where it comes from (if you have other sources of income like catering) is essential to budgeting properly. Avoid the temptation to overestimate or underestimate your revenue.
- Accuracy matters
This seems obvious, but many restaurant owners and small business owners don’t really practice this. It’s of the utmost importance to record all your transactions accurately, to the penny. Precision counts here - don’t round off those numbers. Even those few dollars and cents will multiply over time, and will affect your bottom line.
- Take advantage of modern restaurant accounting software
There is a wealth of software available for almost every type of business these days, and restaurants are no exception. You can find software products that will manage your inventory, interact with your point of sale (POS) systems, and lots of other financial tasks, and most of it is easy enough to use that you don’t need a degree in finance to run it.
- Hire a professional accountant
If all of this seems like too much to manage on your own, it’s probably time to think about using the services of a professional accountant. An accountant that specializes in working with restaurants will not only be able to help you organize your bookkeeping, but will also help you improve your financial processes, and your bottom line.