Here are some Restaurant Accounting basics to know.

Let's have a look at top 5 things required for restaurant accounting

1. Chart of Accounts:

The chart of accounts is a summary of all internal financials for the business. It can be customized to meet the needs of the restaurant. As a result, managers have a better understanding of how each financial account is performing. Because it is customizable, it is critical to create a template and use it consistently to ensure accuracy.

2. Cost of Goods Sold (COGS):

Even if you’re new to the restaurant industry, if you’ve ever placed a purchase order, you’re already familiar with the cost of goods sold (COGS): it’s the total amount you spend on all ingredients.

If you don’t know your COGS figures, this is the most important accounting practice to learn first because all of your restaurant’s profitability is determined by the COGS.

3. Operating Expenses:

Restaurant labor costs, occupancy costs, and operating expenses are all distinct types of restaurant expenses that differ slightly from those of other types of small businesses. Labor costs are where you account for the labor involved in running your restaurant. And operating expenses include everything else required to run your restaurant daily.

4. Cost-to-Sales Ratio:

Calculating a cost-to-sales ratio allows you to compare your company to others while maintaining accuracy. It enables you to see how your business is doing rather than just seeing scary-high prime costs or deceiving sales numbers.

Cost to Sales = (Food Cost / Food Sales) X 100%

5. Prime cost:

One of the most important restaurant metrics is prime cost. To calculate the prime cost, add the total cost of labor (including taxes, insurance, and benefits) and total COGS over some time.

Conclusion

Surviving, let alone thriving, in the restaurant industry is difficult – and, like any other business, it all comes down to the numbers. With the right restaurant accounting software and service provider, you’ll be able to see how those numbers affect the bottom line.

Wenodo is a one-stop solution provider for your restaurant’s entire back office operations. Get the expect’s help you now!