Frequently Asked Questions (FAQ)

We at ProfiPath perform restaurant bookkeeping which involves recording, tracking and monitoring the financial transactions that take place while operating a restaurant and adjusting the budget to align with actual income and expenses. These financial transactions range from the cost of inventory, equipment, and utilities to the prices on the menu. A restaurant bookkeeper oversees the finances and budget for the restaurant. Restaurant bookkeeping with accurate accounting records is one of the most important aspects if you want to run a successful restaurant.

• Keep track of where the money is being spent
• Keep track of how much money is being spent
• Track where the revenue is coming from
• Track how much revenue is coming in
• Calculate how much revenue is needed to turn a profit
• Account reconciliation
• Maintain records for tax obligations and file taxes for the business
• Prepare financial statements such as a profit and loss statement, budgets, and accounts payable records
• Oversee payroll and vendor invoices

Setting up the books for restaurant accounting requires a blend of industry-specific knowledge and general accounting principles. Ensuring that the accounting system is structured accurately from the outset is pivotal to track financial health, monitor key performance indicators, and comply with regulatory requirements. Below is a step-by-step guide to establish the books for restaurant accounting:

Step 1: Choose the Right Accounting Software

• Select Software: Choose restaurant-specific accounting software that integrates with your point of sale (POS) system.
• Software Features: Ensure it can track sales, inventory, payroll, and other essential financial metrics.

Step 2: Develop a Chart of Accounts (CoA)

• Design CoA: Tailor a CoA suitable for the restaurant, considering categories like revenues, cost of goods sold (COGS), operational expenses, assets, and liabilities.
• Customize Subcategories: Customize the CoA with subcategories like food costs, beverage costs, and labor costs for more granular financial tracking.

Step 3: Implement a Point of Sale (POS) System

• Choose a POS System: Select a POS system that provides real-time data on sales, payment methods, and inventory.
• Integration: Ensure the POS system integrates seamlessly with your accounting software for efficient data transfer and analysis.

Step 4: Record Daily Sales

• Daily Sales Summary: Record daily sales and transactions, including all payment types and any comps or voids.
• Revenue Tracking: Use the POS system to track and record revenues and sync this data with your accounting software.

Step 5: Manage Payroll Effectively

• Recordkeeping: Maintain accurate records of staff wages, tips, overtime, and other compensation-related elements.
• Regulatory Compliance: Ensure adherence to federal and state payroll tax regulations and filing requirements.

Step 6: Track Inventory and COGS

• Inventory Management: Regularly update and manage inventory levels, noting any discrepancies and wastage.
• Calculating COGS: Consistently calculate and record COGS, factoring in beginning inventory, purchases, and ending inventory.

Step 7: Monitor Expenses

• Expense Categorization: Categorize and record all expenses, including fixed, variable, and semi-variable costs.
• Vendor Management: Set up and manage vendor accounts, ensuring timely payment and accurate recording of expenses.

Step 8: Reconciliation

• Bank Reconciliation: Regularly reconcile bank statements with the recorded financial data to ensure accuracy.
• Credit Card Reconciliation: Ensure all credit card transactions are accurately captured and reconciled.

Step 9: Financial Reporting

• Profit and Loss Statement: Regularly generate P&L statements to assess the financial performance of the restaurant.
• Balance Sheet: Maintain an updated balance sheet to understand the financial position of the restaurant.

Step 10: Periodic Review and Analysis

• Review Financial Reports: Periodically review financial reports, analyzing for trends, and identifying areas for improvement.
• Budget Adherence: Ensure that actual spending aligns with budgetary allocations, adjusting as necessary for financial sustainability.

Step 11: Tax Compliance

• Tax Filing: Ensure timely and accurate filing of all applicable taxes, including sales, payroll, and income taxes.
• Documentation: Maintain thorough documentation to support all tax filings and be prepared for potential audits.

Restaurants use various software solutions for managing their financials, with different platforms catering to diverse aspects like point of sale (POS), accounting, payroll, and inventory management. Here are several software applications commonly used in the restaurant industry and we have experience using. We will work around what you use and apply our best-in-class standard operating procedures.

Point of Sale (POS) Software:

• Square: Known for its ease of use and low startup costs.
• Toast: Tailored specifically for the restaurant industry, offering robust features.
• Clover: A versatile POS system with various integrations.

Accounting Software:

• QuickBooks: Widely used, offers a comprehensive suite of accounting tools.
• Xero: Known for its user-friendly interface and robust accounting features.
• FreshBooks: Ideal for small businesses and offers strong invoicing capabilities.
• Restaurant365.

Payroll Software:

• ADP: A comprehensive payroll solution that scales to fit various business sizes.
• Paychex: Offers payroll services that integrate with various POS and accounting systems.
• Gusto: Particularly popular among small to medium-sized businesses due to its usability and customer service.

Inventory Management Software:

• MarketMan: Helps restaurants manage inventory, suppliers, and orders.
• SimpleOrder (by Upserve): An inventory management platform focused on streamlining back-office operations.
• Orca Inventory: Offers inventory management along with analytics to help control costs.

Employee Scheduling Software:

• 7shifts: A restaurant scheduling software offering solutions for managing labor costs.
• Deputy: Provides employee scheduling along with other features like tasking and payroll integration.
• When I Work: A user-friendly platform that facilitates employee scheduling and communication.

Customer Relationship Management (CRM) Software:

• OpenTable: Primarily a reservation platform, also offers customer management features.
• Thanx: A CRM platform focused on helping restaurants improve customer retention.
• Wisely: A waitlist, reservations, and marketing platform integrated into one.

Financial Analytics Software:

• Restaurant365: A restaurant-specific financial software offering accounting and operations functionalities.
• Plate IQ: Provides AP automation and insights into spending and cost analysis.
• Avero: Offers insights into sales, labor, and food cost, helping you make informed financial decisions.

Analyzing financial performance is pivotal for any restaurant’s success and involves scrutinizing various financial indicators regularly – often monthly  or weekly- to ensure early detection and mitigation of potential issues. Here’s a breakdown of some crucial financial metrics we assess:

Cost of Goods Sold (COGS):

COGS represents the direct costs involved in preparing the menu items sold. It’s vital for assessing inventory control efficiency and item pricing. Calculated by:

COGS = (Beginning Inventory + Purchased Inventory) – Ending Inventory

It enables you to monitor and potentially stabilize inventory expenses.

Prime Costs:

Prime cost is a crucial metric, comprising the total cost of sales and total labor costs. Monitoring this helps you in enhancing profitability, improving operational efficiency, and identifying areas to reduce expenses. It’s formulated as:

Prime Costs = Labor Costs + COGS

Food Costs:

This refers to the expense incurred to prepare each menu item. It’s crucial for determining the profitability of each item. To calculate the food cost for items, use:

Food Cost Percentage = (Total Cost of Dish / Selling Price) x 100

Overhead Rates:

Overhead encompasses all fixed costs necessary to operate your restaurant, such as rent, utilities, and insurance. Understanding your overhead rate is vital to know the operational cost per hour:

Overhead Rate = Total Fixed Costs / Total Operating Hours

Breakeven Point:

Identifying the breakeven point helps in understanding the revenue required to cover all expenses, after which profit is generated. It can be determined by:

Breakeven Point = Fixed Costs / (Unit Selling Price – Variable Costs per Unit)

Frequent analysis of these indicators will empower you to navigate through financial planning effectively, enable strategic decision-making, and thus, enhance your restaurant’s profitability and sustainability.

With utmost respect and gratitude for considering our services, we bring to the table a wealth of experience and knowledge that has been cultivated through substantial practical engagements and academic pursuits in the financial domain.

In the past, we’ve had the privilege to oversee a diverse restaurant group that encapsulated both casual and fine dining establishments, achieving an impressive annual revenue totaling over $20M. This comprehensive journey enabled us to not only navigate through various financial landscapes but also understand the nuanced and specific needs across different restaurant formats and scales.

Our role extended beyond mere financial oversight. We took pride in leading and collaborating with corporate teams, working hand-in-hand with CEOs, to whom we provided guidance, set expectations, and offered direction in conceptual growth and operational refinement. Furthermore, we crafted, managed, and fine-tuned standard operating procedures encompassing a wide range of financial operations, spanning from day-to-day bookkeeping to the generation of intricate financial statements, and including the curation of quarterly board presentations.

On an academic and professional level, our team is bolstered by a partnership with Certified Public Accountants (CPA) and a foundational education in business administration, with an MBA earned from NYU-Stern, recognized as a top 10 university in the field. These academic and professional affiliations not only refine our skill set but also keep us abreast of the latest trends, regulations, and strategies in financial management.

Every venture, every client, brings forth unique challenges and learning opportunities, and we continuously seek to enhance our expertise from each engagement. We humbly bring this blend of practical wisdom and academic prowess to every partnership, aiming to provide reliable, astute, and transparent financial services to your esteemed establishment.

Your trust is paramount to us, and we are dedicated to safeguarding and propelling your restaurant’s financial health with the utmost diligence and integrity.

Your data’s security and confidentiality are paramount to us. We employ advanced encryption technologies, robust cybersecurity protocols, and secure cloud-based platforms to ensure that your financial data is safeguarded with the utmost integrity. Our team adheres to stringent confidentiality agreements and ethical guidelines to further fortify the trust and security that our clients bestow upon us.

Absolutely, our services are meticulously designed to be scalable and flexible, ensuring that restaurants of all sizes and niches – from small cafes, food trucks, to large-scale fine dining establishments and restaurant chains – find our offerings adept and relevant. We tailor our strategies and service delivery to align seamlessly with your restaurant’s scale, complexity, and unique financial management needs.

Outsourcing your bookkeeping and accounting to our specialized team allows you to divert your precious time and resources towards the core operational aspects of your restaurant. With our experts managing your financials, you can be assured of accuracy, timely compliance, and strategic financial insights while simultaneously reducing the overhead costs associated with maintaining an in-house financial team. This blend of expertise, efficiency, and cost-effectiveness propels your restaurant towards enhanced profitability and financial health.

While you can focus on what you are passionate about— customers and employees, we can focus on ours— dollars and cents.

We pride ourselves on offering an attentive, responsive, and client-centric service experience. Our team is accessible via phone, email, and other communication platforms to ensure that your queries, concerns, and requirements are addressed with immediacy and precision. We’re here to provide ongoing support and proactive insights, ensuring a collaborative and transparent relationship.