If you\u2019re not sure where to start, don\u2019t worry. In this guide, we\u2019ll walk through the fundamentals of restaurant accounting to help you get your business financially on track in 2026.<\/p>\n
<\/span>What Is Restaurant Accounting?<\/span><\/h2>\nRestaurant accounting is simply accounting as it pertains to restaurants. There\u2019s no secret sauce here: just good old financial records and calculators.<\/p>\n
But what is accounting? Well, accounting is the process of keeping financial records for a business, such as information about your cash flow, sales, losses, etc. You can essentially think of it like getting together all your paychecks, receipts, invoices, and any other financial records you have for safe keeping.<\/p>\n
To help keep your accounting efforts as streamlined as possible, use the right tools. Look for software that allows your business to host as many as your financial documents as possible.\u00a0<\/span>Look for something that can automatically calculate taxes, food cost, overhead, and more. Try <\/span>receipt templates for small business<\/span><\/a>. They can be customized to look great and you can also use them as an extra paper trail.<\/span><\/p>\nOnce you have all this information, it can be used for many different purposes, like drawing insights to help management identify areas that could use improvement. Of course, it can also be used for more straightforward purposes, like tax return preparation.<\/p>\n
<\/span>Restaurant Accounting Basics<\/span><\/h2>\nAccounting is a deep field that requires years of study to master, so there is no easy way to summarize even the basics. The shortest way to sum up the basics of accounting is this: accounting is used to record the financial transactions that a business makes. By keeping a record of these transactions, the business owners, managers, etc., can get a better look at the health of their business and make adjustments accordingly.<\/p>\n
To do all this, they need to look at figures, like restaurant expenses<\/a>, revenue, liabilities, assets, and many other terms that could fill up an entire book. If you\u2019d like to learn more about restaurant accounting, you can start with these terms and the other terms that we\u2019ll go over shortly.<\/p>\n![\"Restaurant](\"https:\/\/www.zoomshift.com\/blog\/wp-content\/uploads\/2020\/07\/Restaurant-Management-CTA.png\")
<\/a><\/p>\n<\/span>What Key Financial Reports Do You Need?<\/span><\/h2>\nThere are lots of different reports that you will need to keep track of your restaurant\u2019s finances. Here are a few to start with:<\/p>\n
\n- Chart of Accounts: <\/strong>The chart of accounts is an index for all the different account statements in your company. In short, it\u2019s the ledger for your business.<\/li>\n
- Daily Sales Report: <\/strong>This report records sales figures over the period of a single day. It typically breaks numbers into different categories, like drinks, food, taxes, etc.<\/li>\n
- Cash Flow Forecast: <\/strong>This is a record of how much money you expect to flow into and out of your business over a period of time.<\/li>\n
- Flash Report: <\/strong>This shows key information about a restaurant\u2019s finances at a certain point in time, such as revenue, expenses, debt to equity, etc.<\/li>\n
- Monthly Performance Report: <\/strong>This provides information about how your restaurant is performing financially month to month.<\/li>\n
- Profit and Loss Statement: <\/strong>This is a financial statement<\/a> that provides a summary of revenue, expenses, and costs over a period of time.<\/li>\n
- Cash Flow Statement: <\/strong>The cash flow statement<\/a> is a financial document that summarizes the cash that enters and leaves a company over a specified period of time.<\/li>\n<\/ul>\n
![\"\"](\"https:\/\/www.zoomshift.com\/blog\/wp-content\/uploads\/2021\/05\/Restaurant-Accounting.jpeg\")
<\/p>\n
<\/span>What Key Performance Indicators Should You Track?<\/span><\/h2>\nOnce again, there\u2019s no easy way to summarize all the indicators you should keep track of. However, here a few to start with:<\/p>\n
\n- Sales: <\/strong>This should be the first indicator you look at in most cases. Your sales figures will show how much revenue you are making, and that\u2019s key to staying profitable.<\/li>\n
- Cost of Goods Sold (COGS): <\/strong>This refers to how much it costs you to make the goods you\u2019re selling. In restaurant terms, this means only the cost of the ingredients, not labor and equipment costs.<\/li>\n
- Prime Cost: <\/strong>Prime cost is similar to COGS, but it includes labor costs as well. That means that prime cost is equivalent to the cost of the raw ingredients plus labor. The only thing it doesn\u2019t include are fixed costs. The formula for calculating prime cost is Prime Cost = Direct Raw Materials + Direct Labor.<\/li>\n
- Turnover Ratio:<\/strong> The turnover ratio measures how quickly items enter and leave your business. Typically, it\u2019s used when referring to inventory. It provides a quick look at how efficiently your business is selling its products.<\/li>\n
- Server Benchmarks: <\/strong>This includes several different markers that indicate how well a server is performing, such as the Per Person Average, Server Errors Per Guest, and the Number of Guests Served Per Person Per Hour.<\/li>\n<\/ul>\n
<\/span>The Benefits of Restaurant Accounting<\/span><\/h2>\nRestaurant accounting doesn\u2019t just provide benefits \u2013 it\u2019s absolutely essential. In fact, without engaging in restaurant accounting, you wouldn\u2019t be able to file and pay your taxes, which could land you in trouble.<\/p>\n
Accounting is necessary to make sure that you have records of all important financial data. Not only does it facilitate essential functions like tax paying, but it also provides essential insights into how your business is performing.<\/p>\n
For example, can you imagine a restaurant that had no idea how much money it was making every month? The restaurant would be unable to determine whether it was profitable or not, and it would likely go under pretty quickly.<\/p>\n
Restaurant accounting should not be viewed as something beneficial, but an absolutely integral part of your restaurant, no less important than cooking the food itself.<\/p>\n
Once you have all this information, it can be used for many different purposes, like drawing insights to help management identify areas that could use improvement. Of course, it can also be used for more straightforward purposes, like tax return preparation.<\/p>\n
<\/span>Restaurant Accounting Basics<\/span><\/h2>\nAccounting is a deep field that requires years of study to master, so there is no easy way to summarize even the basics. The shortest way to sum up the basics of accounting is this: accounting is used to record the financial transactions that a business makes. By keeping a record of these transactions, the business owners, managers, etc., can get a better look at the health of their business and make adjustments accordingly.<\/p>\n
To do all this, they need to look at figures, like restaurant expenses<\/a>, revenue, liabilities, assets, and many other terms that could fill up an entire book. If you\u2019d like to learn more about restaurant accounting, you can start with these terms and the other terms that we\u2019ll go over shortly.<\/p>\n<\/a><\/p>\n<\/span>What Key Financial Reports Do You Need?<\/span><\/h2>\nThere are lots of different reports that you will need to keep track of your restaurant\u2019s finances. Here are a few to start with:<\/p>\n
\n- Chart of Accounts: <\/strong>The chart of accounts is an index for all the different account statements in your company. In short, it\u2019s the ledger for your business.<\/li>\n
- Daily Sales Report: <\/strong>This report records sales figures over the period of a single day. It typically breaks numbers into different categories, like drinks, food, taxes, etc.<\/li>\n
- Cash Flow Forecast: <\/strong>This is a record of how much money you expect to flow into and out of your business over a period of time.<\/li>\n
- Flash Report: <\/strong>This shows key information about a restaurant\u2019s finances at a certain point in time, such as revenue, expenses, debt to equity, etc.<\/li>\n
- Monthly Performance Report: <\/strong>This provides information about how your restaurant is performing financially month to month.<\/li>\n
- Profit and Loss Statement: <\/strong>This is a financial statement<\/a> that provides a summary of revenue, expenses, and costs over a period of time.<\/li>\n
- Cash Flow Statement: <\/strong>The cash flow statement<\/a> is a financial document that summarizes the cash that enters and leaves a company over a specified period of time.<\/li>\n<\/ul>\n
<\/p>\n
<\/span>What Key Performance Indicators Should You Track?<\/span><\/h2>\nOnce again, there\u2019s no easy way to summarize all the indicators you should keep track of. However, here a few to start with:<\/p>\n
\n- Sales: <\/strong>This should be the first indicator you look at in most cases. Your sales figures will show how much revenue you are making, and that\u2019s key to staying profitable.<\/li>\n
- Cost of Goods Sold (COGS): <\/strong>This refers to how much it costs you to make the goods you\u2019re selling. In restaurant terms, this means only the cost of the ingredients, not labor and equipment costs.<\/li>\n
- Prime Cost: <\/strong>Prime cost is similar to COGS, but it includes labor costs as well. That means that prime cost is equivalent to the cost of the raw ingredients plus labor. The only thing it doesn\u2019t include are fixed costs. The formula for calculating prime cost is Prime Cost = Direct Raw Materials + Direct Labor.<\/li>\n
- Turnover Ratio:<\/strong> The turnover ratio measures how quickly items enter and leave your business. Typically, it\u2019s used when referring to inventory. It provides a quick look at how efficiently your business is selling its products.<\/li>\n
- Server Benchmarks: <\/strong>This includes several different markers that indicate how well a server is performing, such as the Per Person Average, Server Errors Per Guest, and the Number of Guests Served Per Person Per Hour.<\/li>\n<\/ul>\n
<\/span>The Benefits of Restaurant Accounting<\/span><\/h2>\nRestaurant accounting doesn\u2019t just provide benefits \u2013 it\u2019s absolutely essential. In fact, without engaging in restaurant accounting, you wouldn\u2019t be able to file and pay your taxes, which could land you in trouble.<\/p>\n
Accounting is necessary to make sure that you have records of all important financial data. Not only does it facilitate essential functions like tax paying, but it also provides essential insights into how your business is performing.<\/p>\n
For example, can you imagine a restaurant that had no idea how much money it was making every month? The restaurant would be unable to determine whether it was profitable or not, and it would likely go under pretty quickly.<\/p>\n
Restaurant accounting should not be viewed as something beneficial, but an absolutely integral part of your restaurant, no less important than cooking the food itself.<\/p>\n
There are lots of different reports that you will need to keep track of your restaurant\u2019s finances. Here are a few to start with:<\/p>\n Once again, there\u2019s no easy way to summarize all the indicators you should keep track of. However, here a few to start with:<\/p>\n Restaurant accounting doesn\u2019t just provide benefits \u2013 it\u2019s absolutely essential. In fact, without engaging in restaurant accounting, you wouldn\u2019t be able to file and pay your taxes, which could land you in trouble.<\/p>\n Accounting is necessary to make sure that you have records of all important financial data. Not only does it facilitate essential functions like tax paying, but it also provides essential insights into how your business is performing.<\/p>\n For example, can you imagine a restaurant that had no idea how much money it was making every month? The restaurant would be unable to determine whether it was profitable or not, and it would likely go under pretty quickly.<\/p>\n Restaurant accounting should not be viewed as something beneficial, but an absolutely integral part of your restaurant, no less important than cooking the food itself.<\/p>\n<\/a><\/p>\n<\/span>What Key Financial Reports Do You Need?<\/span><\/h2>\n
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<\/p>\n<\/span>What Key Performance Indicators Should You Track?<\/span><\/h2>\n
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<\/span>The Benefits of Restaurant Accounting<\/span><\/h2>\n