Restaurants tend to be either wild success stories or dramatic failures. Statistics show that 25% or restaurants end up closing after being open for less than a year. When a restaurant fails this quickly, it usually is not because of the quality of the food or the service. When this happens, the problems are much more likely to have something to do with the restaurant’s accounting and bookkeeping practices. Running a successful restaurant involves much more than preparing high quality food and offering top notch service. Just because a chef has mastered their craft in the kitchen, it does not mean that they have a strong grasp of restaurant accounting and bookkeeping practices.
Start Off With a Business Plan
The first step to getting your restaurant on track is to come up with a business plan. Many people start their restaurant thinking primarily of the food and the front end organization, a but a real business plan must include cost control measures. These cost control measures involve figuring out the ideal cost for each menu item and then setting up clear portion sizes to keep your actual costs in line with your ideal costs.
Once you have a plan in place, you need to effectively execute the plan. This means communicating your expectations with your staff and keeping accurate records of all of your food and beverage costs. Without accurate bookkeeping there is no way you can actually put your plan into action, let alone measure its effectiveness.
Keeping Accurate Records of Expenses is an Essential Part of Your Success
All restaurants, all businesses for that matter, measure their success in terms of profit. Even if you are incredibly busy and have amazing gross sales, if your costs are too high you will fail to make a profit. This is usually what happens when a really good restaurant fails to stay open for business. Keeping accurate records means taking a constant inventory of your supplies, tracking waste and implementing an ordering system that prevents you from wasteful over-ordering. Once you have your food costs under control, you will have to take a close look at your other operating expenses including occupancy costs, labor percentage and any other operating expenses you can think of.
Develop an Accurate Restaurant Bookkeeping System
One of the best ways to do this is by using a P&L or profit and loss report. A profit and loss report is a concise document that will allow you to see all of your restaurant operating expenses at a glance. Your P&L report will break down all of your operating costs so you can tell immediately if some of your expenses are getting out of hand. Restaurant accounting systems, also known as POS or point of sale systems, can be set up that keep track of sales, inventory and operating costs automatically. But there are many other accounting issues that still need to be dealt with, including managing payroll, calculating sales tax and actually paying all of the bills.
When it Seems Like Too Much Get Some Help!
As a restaurant owner or manager, you probably have enough on your plate without trying to handle all of the bookkeeping and accounting duties as well. By hiring an accounting and bookkeeping service you will be able to concentrate your efforts on what you do best – running your restaurant operations. The accounting and bookkeeping services that you hire will handle all of the record keeping, payroll management, tax calculations and alert you immediately if your costs are getting out of line. This will allow you to run your business at the highest profit margin possible.