Your Guide to Restaurant Bookkeeping

When opening a restaurant, or taking on new responsibilities in a restaurant, your excitement about working on the menu and managing your team may momentarily fall away when you’re faced with the reality of restaurant bookkeeping. 

Kika Whestof, Director of Operations at Homer in Seattle, knows that doing bookkeeping for restaurants is no small feat. “There are a lot of people who touch on our bookkeeping,” says Whestof. She says that keeping things accurate can be a serious concern. 

With so many different moving parts, handling the bookkeeping for a restaurant is complicated. But with this breakdown of all the different elements of restaurant bookkeeping, you can master every detail with accuracy. Let’s crunch the numbers. 

DISCLAIMER: This content is provided for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. You should contact your attorney or other relevant advisor for advice specific to your circumstances.

How to do Bookkeeping for a Restaurant 

Step 1: Record restaurant sales

Recording sales daily helps you manage your restaurant bookkeeping with precision. Looking at sales daily, and not weekly or monthly, mirrors the way that credit card sales process in your bank account and will help give you a clear picture, says SLC Bookkeeping. 

You’ll want to enter these daily sales into your accounting system. Every point of sale system (POS) has different capabilities when it comes to its daily sales reporting, so familiarize yourself with yours so that you know what every number on the daily sales report means. 

Depending on your business, you may want to keep track of several items in your sales report separately and also look at the total daily sales. For example, you could keep track of beverage sales and food sales separately. It’s also important to know the total cash sales and the total sales by credit cards. Just remember that even if you separate out specific types of sales, your total daily sales including all your categories should always be the same. 

Step 2: Pay restaurant expenses

Chances are, you’re not growing all your ingredients and washing all your linens — restaurant businesses are a team effort between restaurants and external vendors. Paying your bills, also known as managing your accounts payable, keeps you in business and keeps your vendors happy. Restaurant managers often find it helpful to have a regular day of the week (or multiple) where they work through accounts payable so nothing gets delayed. 

Your accounting system should have a way to enter bills and pay them. But before entering bills into your accounting system, it’s a good idea to reconcile every bill. Look at each purchase order and make sure it matches up with the receiving order. Then, make sure the amount you have been invoiced for matches the items on both the purchase order and receiving order. 

Step 3: Manage restaurant payroll

The first step to keeping a team happy is paying them for their work — and paying them correctly. Payroll is the process of calculating and distributing paychecks for your employees, and it can be tedious. 

Every employee will have different pay and hours, depending on their experience and tenure, role, and whether or not they’re front of house, back of house, or management. You may have some employees who make an hourly wage and some who make a salary, and you’ll also have to account for tips if you operate on a tipped structure. Additionally, when running payroll, you need to pay attention to what taxes need to be withheld for each employee. 

Many restaurant managers find this to be a difficult process, as there are a lot of factors involved and the stakes are high: a miscalculated paycheck can lead to unhappy employees who eventually leave for greener pastures. 

Some restaurants opt to pay to outsource their payroll, but if you decide to take on payroll yourself, make sure you pay attention to every detail and invest in software that makes the process more streamlined. 

Step 4: Reconcile restaurant accounts

Reconciliation is a fancy accounting term that simply means taking a look at two sets of records or balances and making sure they match. Reconciling all of your accounts matters because it can help you catch any errors such as lost checks, cash variances, or incorrect deposits as well any accounting errors you may have made, says Restaurant 365. 

You can reconcile your accounts by taking a look at all your financial statements. Compare these to bank statements, credit cards, and all other financial transactions. If the records match, then consider your accounts reconciled — if not, you’ve got some digging to do.

Step 5: Master restaurant financial reporting

Financial reports show you exactly where your business stands. Knowing which reports to run when and how to read them sets you up to be in-the-know about your business. 

There are a few key reports that you should run weekly to understand the finances of your restaurant.

• Chart of Accounts. This report will give you a bird’s eye view of your restaurant financials. It divides the money you spend and receive into larger categories like revenue, liabilities, cost of goods sold, assets, and equity.

• Profit and Loss Statement (P&L). A P&L shows you an overview of all your costs and revenue. This report will outline the details of your revenue, food costs, labor costs, and operating expenses.

• Cash Flow Statement. With a Cash Flow Statement you’re able to see the amount of cash that comes into your business versus the amount that goes out. This report will tell you how much cash you have on hand. 

• Balance Sheet. A balance sheet lists your assets and liabilities to show your total equity — what your business is worth. Your assets are all the things you own like equipment, cash, and inventory. Your liabilities are those things you owe money on like vendor bills or any loans you have. If you subtract your assets from your liabilities you get your total equity. Ideally, you want to work toward having positive equity. 

• Controllable Costs Report. This report shows you all the costs you can control including labor costs, food costs, and any other materials you purchase. It helps you determine the margin you have for your operations.

POS Features that Help with Restaurant Bookkeeping

Reporting & Analytics 

Your reporting and analytics are a crucial part of managing efficient restaurant bookkeeping. They will help you determine the success of your business. A POS with solid reporting and analytics features in place will get rid of the setup work you’d otherwise need to do on your own. 

Integrated Payroll Capabilities

According to restaurant.org, 30% of businesses still use payroll technology that’s more than 10 years old. If that’s you, it could be time to upgrade to a payroll system that’s integrated with your POS. As one of the more complicated steps of restaurant bookkeeping, payroll can become much simpler when it’s part of a system you’re already using.

Integrated Inventory Capabilities 

Keeping an accurate inventory helps you understand your operations costs and assets. Instead of keeping track of inventory costs manually, consider using an inventory system that works with your POS. Tracking the movement of inventory this way means one less task on your to do list and a more accurate inventory. 

Restaurant Bookkeeping Software

Toast POS with Built-in Reporting and Analytics

Toast POS includes built-in Reporting and Analytics, so you can keep all aspects of your business in sync. Toast Reporting and Analytics is easy to use and is cloud-based, which means you can access your restaurant data anywhere, anytime. With features like an automatic nightly email of key business metrics and real-time sales data, you’ll have everything you need to manage your restaurant like a pro. 

XtraCHEF Sync for QuickBooks Online

Toast also has integration with QuickBooks online through xtraCHEF Sync. When you sign up for Sync, you just have to sign up and map sales one time, and Sync will automatically integrate sales data regularly to QuickBooks online. 

DAVO

Stressed about separating out your sales tax? With DAVO and Toast, you don’t have to worry about that anymore. DAVO automatically separates out the sales tax you collect each day. And when it comes time to file with your state, DAVO does it for you. 

Keep Your Books in Order

Although learning bookkeeping for a restaurant can feel like a daunting task, know that many have gone before you, and you can do it, too. You can always ask for help and seek more resources. With many tools and integrations to help you along the way, you’ll be ready to run — or optimize! — your new restaurant before you know it.