When your restaurant is filled with guests every night, and your online orders keep coming, that is when you know your business is thriving. Your food and services are rated five stars, and your staff is happy. These are some telltale signs that you are doing good.
But, what’s something that you cannot see but greatly matters for your success? Your books! Improper record-keeping and bookkeeping are reasons why businesses in Oakland fail. Restaurants experience a high volume of transactions, but recording them can be time-consuming.
All of this can be especially a burden when you lack accounting expertise. This is why it is recommended that we work with a restaurant CPA in Oakland. This way, you will be able to direct your entire focus on business sustainability and growth.
Contemporary challenges in California restaurants
You are stuck using old methods
If you are still using Excel spreadsheets to create reports and budgets, moving to more advanced software can lessen your pain points. Spreadsheets can be a headache to fill in the first place. Moreover, any work that has been done manually has the potential to contain errors.
Another downside of manually filling spreadsheets is that they take a lot of time. By the time you finish the entries, the data may even go out of date!
Instead of Excel, move to cloud-based accounting software. They provide automated solutions and real-time data, meaning your numbers will always be up-to-date and accessible from several devices.
Determining the prime cost
Prime cost is the total amount you spend on labor costs and cost of goods sold. Ideally, restaurant owners should maintain a prime cost of 60%. However, if you have recently opened up your business, the prime costs should be around 75%. You can use a quarter of your revenue to pay for other expenses, such as utilities and rent.
Many restaurants in California do not care about their prime costs and do not understand how it affects their business. Spending too much or too little on labor costs and raw materials can be harmful to the business.
It is important to calculate your prime cost percentage every month and create a plan on how you will manage that month’s expenses.
Inventory management
Perhaps one of the most complex parts of running a restaurant business is inventory management. Restaurants must buy several raw materials that are converted into goods that are later sold to the customers. Inventory management allows you to carefully analyze the value of these raw materials so that you can provide goods to your customers at reasonable prices.
Inventory management should be done regularly, on a daily, weekly, and monthly basis. Restaurant inventory is more likely to go to waste by rotting or expiring.
Third-party delivery partner reconciliation
Apart from customers coming to dine in your restaurant and other home deliveries, you may have set up your restaurant on third-party applications as well. These may include DoorDash, UberEats, GrubHub, PostMates, etc. You must efficiently collect and manage the data from these third-party websites for accurate reporting.
With orders coming from different channels, it can be challenging to integrate them in one place. This calls for a central accounting system with a unified view of sales and expenses.
When sales, expenses, and profits are not reported properly, it creates discrepancies in the restaurant’s financial statements.
Payroll and staff management
If it gives you a headache every time you think about the payroll process, maybe you need a new system. The restaurant industry experiences the highest number of staff turnovers, making it challenging to keep up with tips, taxes, and paychecks.
By working with a cloud payroll app and accountant, you can lessen your burden.
Consult with accounting experts today!
By resolving the mentioned accounting challenges in your restaurant business, you can move towards growth. You may also be able to reduce tax liability and avoid hefty fines. Hire an accountant today!
