Businesses in the restaurant industry are looking to find a restaurant accounting guide to manage their finances. The pandemic is wreaking havoc on the US restaurant industry, with more than 10% of the restaurants shutting their businesses down completely.
With the ever-changing situation due to the pandemic, the industry is facing uncertainty. Therefore, if you are a restaurant owner, you should know your business accounts and bookkeeping to ensure its survival.
You can go over the books to find out all the expenses and reduce them. So, what is a restaurant accounting guide? What does it entail? Let’s go over it.
The Definition of Restaurant Accounting
Restaurant accounting includes the process of maintaining tabs on the sales, managing the cash flow, checking the inventory, and looking at the expenditures of running a restaurant. It can help you track your progress, keep a check on your expense, and help you plan for your business’s future.
If you don’t use the restaurant accounting correctly, you won’t have an idea about the employers you need or the inventory your business requires. Moreover, it can help you evaluate the pricing of the food items you are offering. In a nutshell, it affects the entire restaurant’s finances in the long and short run.
All of these things might sound a little bit confusing and hectic, especially if you are from a non-accounting background. Nevertheless, with a proper restaurant accounting guide, you can get a grip over all these items in no time.
Restaurant Accounting Guide
There are a few things you need to know about the accounting for your restaurant. There are various accounting methods a business can use to get a competitive edge over others, but here are a few of them specifically for the restaurant industry.
1. Knowing about Fixed and Variable Costs
The most important thing you should know about is the fixed and the variable costs of your business. It will help you know about the amount of money you will need to bear the fixed expenditure of the restaurant to avoid it from closing down. The variable costs will only come into factor depending on the operations.
2. Cash flow Management
Cash flow management is something that every business needs to keep an eagle eye on, regardless of the industry they are operating in. You need to know how much money is coming into your business (Cash Inflows) and how much is going out (Cash Outflows).
If you can identify the cash flows throughout the seasons, you can come up with a strategy to deal with it accordingly. Your business can save extra money when the cash inflows are high for the time when the cash outflows will rise.
Taxes are something you cannot avoid no matter what you do. But that does not mean you can’t save up on the amount going towards taxes. There are various tax-saving tips for your small restaurant to help you find ways to save money.
When we talk about restaurant accounting, the emphasis is on costs largely. If you can find a way to bring down your costs and expenses, you can increase your profitability without going through a lot of hassle. Therefore, the restaurant accounting guide is all about cutting down costs.
Importance of Restaurant Accounting
Restaurant accounting is imperative for business is it helps you in many ways. You can use it for the planning and the forecasting of your restaurant. Here are some benefits you can enjoy for restaurant accounting.
Helps in Inventory Management
Restaurant accounting enables you to manage your inventory levels to ensure no shortage or abundance of supplies. Moreover, it helps you in avoiding any food going towards wastage. It also improves the customer’s experience as you can serve them their favorite items.
Sets the Accurate Prices
By tracking your expenses, you can calculate the prices you have to set for the food items you are offering. You can find out the COGS (cost of goods sold) to determine the price you need to set to achieve an optimal profit for your business.
Improves Cash Flow Management
Cash flow is the most crucial part of any business, including restaurants. Without having a clear idea regarding the amount of money coming in and going out, your restaurant can face a liquidity crisis. Therefore, you can use restaurant accounting to avoid any problems in the cash flow.
Aids in Forecasting
Through restaurant accounting, you can create accurate financial statements for your business. You can use it to forecast your restaurant’s growth. Without proper planning, you will not be able to sustain your business. It shows how important restaurant accounting is.
We hope this restaurant accounting guide gives you an idea of how to manage finances in a better way. You can use it to learn about the ways to the ever-changing situation of the restaurant industry. So, go through it carefully to understand the bookkeeping process for your restaurant.