What affects the success of the gastronomic industry? What causes some restaurants to enjoy unflagging popularity, while others close in a short time after they are opened? The restaurant business is all about preparing delicious food and giving excellent service. But behind this apparent magnificence hides the painstaking work of accountants and analysts who collect and process information about the incoming raw materials and consumables, cost of food preparation, wages of employees, marketing expenses and so many other aspects that are involved in the day-to-day functioning of the industry. The vast amount of data available is analyzed, processed considering industry standards and multitude of affecting factors and reported with rich insights and visualizations to the owners, management and the Restaurantreprenuers who can then decide the future course of action.

This is a shout out to all Restaurantreprenuers about what they need to keep in mind to ensure they win the Numbers game:

Management of inventory and COGS

1. Inventory and COGS – A common mistake is to treat all raw material purchases as an expense whereas the correct method is to categorize the purchases of food and paper items in inventory and treat them as expense when the certain ingredient is used as an input to produce a particular dish.

Management of cash

2. Cash Theft and Reconciliation – Cash theft is quite prevalent when not monitored accurately. Ideally cash receipts must be deposited by the next working day in the bank. However, if the cash amount collected is quite small it may be deposited every 2 to 3 business days, but excess cash should be moved from registers into the safe at regular intervals.       One of the biggest blunders is not to reconcile the cash receipts with the deposits in the bank on a regular basis. A well-documented cash reconciliation program should be in place to discover can discover the discrepancies in cash deposits. Our cash reconciliation reports have helped restaurants repeatedly to tame this sticky issue. Contact us to know more.

Management of payables

• Getting a notice of disconnection of utility supplies or penalties from city office when your cash register is ringing can really disrupt operations and break the moral of the restauranteurs. It is imperative that all payables are recorded, and bills get paid on time to ensure smooth functioning of the restaurant. To do so, the AP policy should be well documented and supported with technology and constant reporting.   Overpayments, double payments, and cross payments are quite common and need to be addressed without delay. Ace restaurant accounting and reporting is an irreplaceable part of restaurant success. Email us at abhinandan@fruxientanalytics.com to find out how we can help.

Payroll Management

• Payroll function is sometimes quite challenging and complicated. These days large chains have outsourced the payroll functions to companies who own the payroll processing software and run it for them as well. This has reduced the chance of errors. The issue with accounting for payroll is that the accountant must enter the gross amount in the books and not the net amount paid after deduction. He must categorize the salary portion as expense and treat the withholding part as a liability and then set off the liability when it is paid off. The main advantage of doing this is to know whether correct amount of tax is paid to Government authorities and if there is any unpaid portion which is still needs to be paid. The payroll liabilities reconciliation report is key to identify discrepancies.

Bank Reconciliation

• Bank reconciliation is the only way to deal with duplicate entries, missing entries, error of transposition etc. Not completing a perfect reconciliation of bank accounts could lead to serious misreporting. Management decisions could take a completely different course due to such errors. After all, mistakes in accounting are detected using such reconciliations. 

Failing to categorize Expenses properly

• Categorizing expenses properly is of prime importance because incorrect classification could lead to bloating certain expense accounts and under-reporting some.  A quite common mistake is to treat a capital expenditure as revenue expenditure and vice versa. Preparing an expense inconsistency report is an excellent way to spot such issues and rectify them.

And finally doing Too Much Yourself

• Outsourcing administrative tasks like can be highly profitable. By outsourcing accounting functions, the owner gets time to attend to guests, engage in PR and become the face of the restaurant rather than the back office. On the other hand, accounting costs are reduced significantly, and expenses dedicated to the hiring and maintenance of internal specialized personnel are eliminated.