Accounting and cooking seem to be opposites, and most restaurant managers and chefs will admit that they find accounting to be a bit tedious. But no business cannot be successful without proper accounting, and the restaurant industry is no exception. Whether they’re in the business because of a passion, an ambition to be an entrepreneur, or some other reason, restaurant managers must know the basics of accounting in restaurants to ensure their businesses’ survival.
Although accounting is complex with many technical aspects, the food and drink industry has its distinct vocabulary. Be assured that you don’t have to be an elite accounting professional to wrap your mind around these concepts. A lot of them are ordinary sense, tucked away in accounting jargon and acronyms. The depth and extent of the London Accounting Firms you choose to use will depend on the nature of your company and its financial requirements. Whatever you decide to do, you must have an accounting system, which you should be aware of. Here we’ll have an overview of the most basic terms as well as important statistics and reports you’ll need to produce.
Restaurant Accounting Basics
Start by breaking the cash flows into specific points of data to know the steps you must take to improve the efficiency of the Accountants For Tax Returns. A meticulous bookkeeping system will give you the edge you want by eliminating any uncertainty from your financial decisions. A variety of restaurant accounting software and point-of-sale (POS) software is readily available to assist you in breaking down your business into distinct information areas. If you’re running a smaller restaurant and are familiar with the details of your POS system and the data in sufficient detail and you’re earning a profit, this software could be enough. Before working with an accountant or bookkeeper CPA, it is essential to be familiar with basic terms in restaurant accounting. Let’s begin with an all-encompassing phrase.
Key Performance Indicators (KPI)
KPIs are numbers that measure the distinctive parts of your company. Studying KPIs allows you to look into the details of your company and discover what’s working and what could be improved. We’ll examine these from three perspectives, including the back of the house, front and general.
Back of House
Before food items leave the kitchen, you’ll need to break down the numbers to turn profits. These are KPI things to think about, including the cost of sales and inventory turnover ratio cost of food, percentage of cost and the profitability of menu items.
Cost of food per cent
The cost of food percentage will tell you what your food will cost compared to the menu prices. The difference is the contribution percentage, i.e. the value that your restaurant can add through the preparation and serving of the food. Be aware that the cost of food as 20 to 35% of the menu is the standard used by many restaurants.