It’s no surprise that the key to any successful business is profit.
In order to survive, restaurants need to make money, bottom line. In order to make money, restaurant owners and operators must properly manage their finances, detailing where money is being spent, down to the penny, and where the majority of revenue is originating. Knowledge of basic accounting principles coupled with reliable accounting software, such as QuickBooks, Peachtree, MAS 90, Intacct, etc. can go a long way.
There are 3 basic necessities for effective restaurant accounting:
- Tracking inventory: Your inventory includes everything from ingredients, products, cooking supplies, and cleaning supplies. Inventory represents a substantial portion of your restaurant’s investment and annual costs. Tracking and counting inventory regularly throughout the year is vital, as it illustrates your usage and inventory costs. The good news is, with technology today, this no longer has to take hours on end writing everything out on pen and paper. You can now cut down your time spent on inventory and increase your accuracy!
- Cash flow management: This is vital to knowing and understanding your restaurant’s financial state. In order to manage cash flow, you must keep track of all the money that enters (profits) and leaves (expenses) your restaurant on a regular basis. Doing so will help you create a balance between profits and losses, ultimately increasing your net income. Having a healthy cash flow can make all the difference in thriving, staying above water or drowning in expenses, so you want to make sure you know where your restaurant stands.
- Recording data: Record everything! When I say everything, I literally mean everything: purchases, revenue, inventory usage, payroll totals, etc. Of course, using a POS system will help in housing all of this information so that you will not be solely responsible for keeping up with the endless numbers, but having all of this information on record will be of great benefit to your restaurant.
In the midst of all the hassle and dollar signs, take a breather. You’ve got a lot on your plate, especially if you’re trying to oversee the daily operations of a busy restaurant along with managing its finances. Remember that technology is your friend. So much of what we have just covered can now be streamlined with back-office software! Once you’ve established a thorough accounting process that works for your restaurant, stick to it. You will thank yourself for establishing an unwavering routine.