In the first part of this article, your reliable Gold Coast accountant shared some tips on how you can implement an accounting system for your restaurant.
Now, we are going to dive in deeper and discuss what you need to track to determine the restaurant’s flow of funds and what reports matter for restaurant accounting:
What You Need to Watch to Track Flow of Funds
Payroll
All restaurants have employees, more than just the owner and the managers. There are cooks, dishwashers, waitstaff, bartenders, and even a janitor.
Understanding your payroll is crucial if you want to ensure all your employees are getting paid, your restaurant is compliant with labor laws, and your business is running optimally.
Inventory
Inventory management is probably the most complex, costly, and important area of accounting for restaurants.
You need to keep track of all the ingredients, whether they are sold by the pound, item, or case. You need to make sure you have enough food to serve hungry guests and that you don’t overstock.You also need to know when to reorder and when to throw out food.
Your restaurant inventory will be much more than just food. You need to know the number of napkins, straws, and other items to be prepared for your customers.
Accounts Payable
This area of accounting is closely related to the inventory area. You need to know when you need to pay your suppliers, and you need to know the cost of all ingredients and supplies.
More than just the money part, you need to know when your supplier is running out of stock and when you need to restock.
Cash Flow
Cash flow is one of the most critical areas of accounting. It is the difference between your total cash inflow and outflow. If your cash flow is positive, you are making money. If your cash flow is negative, you are losing money.
Sales
Sales are the basis of your cash flow. You need to know how much income you are generating to know how much cash flows into your restaurant’s bank account.
Cost of Goods Sold
Cost of goods sold (COGS) is the total expenses you incur for the goods you purchased for the restaurant.
These include the costs of ingredients, of the equipment and tools purchased, of the rental and lease expenses, and others.
What Reports Matter for Restaurant Accounting
Now that we know the different areas of accounting for a restaurant let’s look at reports that are important to review to track and understand your restaurant’s performance.
Cash Flow Report
The cash flow report summarizes your cash balance at the beginning of the month and the cash balance at the end of the month.
Inventory Report
The inventory report is a detailed report of all your restaurant’s inventory items, along with their cost and their number on hand.
Purchasing Report
This report is paired with the inventory report. The purchasing report is all the goods that you purchased for the restaurant.
Cost of Goods Sold Report
The cost of goods sold report is a detailed report of all the goods you purchased for the restaurant.
You can see the cost of each item, the date you purchased it, and the inventory quantity you have right now.
Sales Report
The sales report is a detailed report of all your restaurant’s sales.
You can see the total number of sales you have for the month, the profit made for each sale, the total profit for the month, the profit percentage for the month, and so on.
Conclusion
As you can see, accounting for restaurants is not as simple and easy as you might have thought. Without a proper accounting system for your restaurant, it will be really hard if not impossible for you to be on top of all the financial aspects of your business. Inventories, cashflows, payroll, sales, and more - these all have to be handled by an experienced small business accountant. By having an accountant, you can have peace of mind knowing this part of your business is taken care of and you can focus on what you do best.
The ECommerce Accountant offers you the services of a seasoned Gold Coast accountant. Contact us today to learn more about how we help businesses from different industries!