Basic Restaurant Accounting
The key to any successful business is simple: profits. Restaurant businesses need to make money to survive, and in order to make money, restaurant owners, operators and managers need to know basic restaurant accounting systems to control cash flow, reduce losses and maximize their profits. Keeping track of your finances will put you in a good place to monitor your cash flow and make the most of your business in the long run.
Managing cash flow means tracking all the cash that is coming in and leaving your restaurant. With sales and expenses always playing a balancing act, estimating future cash flow can be a guessing game until you get the feel for your restaurant's business patterns, or when the money comes in versus when it goes out. Essentially, restaurants strive for more income than expenses. When a restaurant is able to bring in more money than it spends, it maximizes its net income, and the overall profits grow.
Recording your cash flow, including income and expenses, is critical to your restaurant's accounting procedures. Your income includes all cash, credit card and check sales received. Outgoing expenses should be recorded with the help of receipts and invoices. Your Point of Sale (POS) system typically keeps track of all credit card and cash sales, and all receipts should be filed and recorded in a Profit and Loss document (P&L). It is also essential to keep a close eye on your inventory counts. » Use our Weekly Cash Flow Worksheet
Your restaurant's inventory includes the supplies, products and ingredients you have on hand to prepare and serve food and beverages. Inventory is an important factor in managing restaurant accounting, because it represents an investment in food and supplies that are needed to make a profit. You should always consider your inventory as cash in a different form, and count it consistently and thoroughly.
» Learn More About Conducting Inventory and Tracking Usage
A restaurant's profit and loss statement, or P&L, is much like an income statement for the restaurant. This document serves as a report to summarize income, expenses and inventory, illustrating a restaurant's total profits and losses over a period of time. It is best to prepare a P&L each week if possible. This makes it easier to track numbers and comparing reports from month to month and even year to year.1 A P&L statement includes information relevant to your cash flow, including sales and labor expenses.
» Learn More About the Profit and Loss Statement
Although large chain restaurants may have an in-house staff of accountants available to do the leg-work, many restaurants use computer programs to help record their financial information. The best software includes a Point of Sale (POS) system, financial software, and the software to integrate the two. Fully-integrated systems like these can take the burden off operators and help them fully analyze their financials by running comprehensive reports. » Learn More About Utilizing Restaurant Technology
More from Restaurant Management and Operations...
- An Overview of Different Restaurant Types
- Restaurant Roles and Job Descriptions
- How to Determine What Staff You Need
- How to Develop a Restaurant Employee Handbook
- Managing Operational Risks
- How Not to Fail at Running a Restaurant
- The Importance of the Point of Sale (POS) System
- Why Going Green is Good for Business
- Running Successful Take-out and Delivery Services
- Fundamental Upselling Strategies for the Restaurant
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