Many restaurant companies own and manage multiple brands, entities, and locations across multiple states. This can create difficulties when each site runs its own instance of QuickBooks, and the financials need to be consolidated using Excel at the end of the month.
Multi-location businesses commonly encounter issues involving manual entry mistakes, different currencies, decentralized payables, inter-entity transactions, and taxation based on location and country. In addition, accounting complexity grows as businesses grow.
This post is focused on multi-location restaurant bookkeeping. But first, let’s understand how accounting and bookkeeping operations take place in a typical restaurant setup.
How Cash Flows at a Restaurant
Cash flow is crucial for keeping your restaurant alive, but many business owners make cash flow mistakes that stop their growth. Hence, it is critical to calculate your cash flow each accounting period. It allows you to pay for raw materials and labor, acquire equipment, and handle all other expenses needed to keep your restaurant thriving.
Your total cash flow for a period is the net cash inflow minus the net cash outflow—or the total cash earnings minus the total cash payments.
Your restaurant can grow when your cash inflows are greater than your cash outflows. Conversely, if your cash outflows are higher than your inflows, you will have negative cash flow, which reduces your cash balance.
It is generally better to have high positive cash flow than low or negative cash flow, but you should also consider how you generate that cash flow.
Restaurants don’t receive outside financing or sell assets to make money. Instead, they should rely on their primary operations for most of their operating cash flow.
Operating cash flow is the amount of cash collected from food and beverage sales minus the number of operating expenses.
The higher your operating cash flow, the less you need to rely on outside funds to run your business. In addition, you will have more cash available to pay down debt and share with the owners as a result.
How to Do Accounting and Bookkeeping for a Single-Location Restaurant
Successful restaurant accounting begins with you. Whether you’re keeping the books yourself or outsourcing your restaurant accounting, keeping up with daily bookkeeping is crucial to staying ahead of your competitors and turning a profit.
1. Record Sales Through PoS
It is important to record daily sales entries rather than monthly or weekly ones. Most restaurants accept credit card payments and settle them on a daily basis. The credit card deposits you receive will be deposited separately into your bank account as a result. In addition, your accounting system should mirror the pattern of money flowing into your bank.
In order to record your daily sales, you must generate a report summarizing them. Your restaurant’s point of sale (POS) system should be able to provide a daily sales report if you need to track daily sales. If you want a custom report that provides more detail, you will have to work with your POS system.
You can create a daily sales journal entry and memorize a transaction in your accounting software once you have a sales summary.
2. Manage Account Payables
Setting up accounts payable is the next step in restaurant bookkeeping. Keeping your suppliers satisfied is critical if you want them to continue working with you.
To begin, learn how to enter bills and pay bills in your accounting software; both are simple tasks to complete. It is advisable to enter your bills 1-2 times per week and pay them once every week.
Using your accounting software to print checks saves time and effort by automatically importing the payment information. You may also pay your bills online by linking your bank account to the accounting system and signing up for online bill pay.
3. Process Payroll
Your restaurant business is at serious risk if you do your own payroll. In case you file your payroll taxes incorrectly or late, you will be hit with substantial penalties and interest. Hence, you are exposed to a high level of liability if you do not employ an accounting firm to handle your payroll.
Outsourcing your payroll to IBNTech is an affordable alternative to in-house payroll processing. We’re reliable and even can take care of your entire accounting process. More on this at the end of this post.
4. Reconcile Your Accounts
Verifying that all of your company’s financial activities have been recorded is the key to correctly managing your books. Hence, reconciling your accounts is critical. You must verify that all of your accounts, not just your bank accounts, have been recorded correctly.
Opening and closing balances should be listed on statements for accounts like bank accounts, loans, credit cards, and lines of credit. Account reconciliation verifies that you are receiving accurate financial statements for all of them. Therefore, you should reconcile them all.
5. Use Financial Reporting
If you are not using financial statements to manage your restaurant, you are operating without sight. Small businesses should have vital accounting reports to make informed decisions.
Restaurant businesses tend to have tiny profit margins, so regular evaluation of financial statements is crucial. It is also important to monitor sales versus the cost of goods sold and labor ratios.
Restaurants should also keep a close eye on the cost, aiming to keep the cost of food + beverages + labor below 3/4th of total sales.
But How Do You Manage Bookkeeping for Multi-Location Restaurants?
Here is how you can make sure that every restaurant under your restaurant group is controlled in a way that improves its chances of success.
6. Use Your POS as a Tool
Properly setting up a restaurant POS system is not something to be taken lightly. Although setting up the system requires a lot of time, it is well worth it. Knowing the ins and outs of the system enables the company to generate reports that highlight important metrics. Having the right information is more valuable than having a lot of information.
The purpose of a restaurant accounting system is to keep an eye on the daily deposits from the cash register to the bank. If the cash reports don’t tally, there’s an issue. So every day, you should examine the daily sales summary report to see if theft has become a problem in a restaurant.
7. Simplify Your Accounting Charts
Having multiple locations can make keeping track of a restaurant’s finances tricky, particularly if carelessly constructed charts of accounts.
Accounting charts determine the structure of expense and revenue reports, as well as how they appear. An overcomplicated chart of accounts may make understanding reports difficult for owners.
Here are our recommendations:
8. Monitor Sales for Each Location
Your accounting system must mirror your bank activity by creating separate sales journal entries for each location and day. Use your accounting software to import daily sales journal entries using an external software plugin. Using memorized transactions will only reduce data entry, resulting in lesser insights.
9. Use Classes for Different Locations
Your restaurant bookkeeping software should be able to account for the income and expenses for each location. Here, QuickBooks’s class tracking feature is useful in separating the income and expenses for the various restaurant locations.
You can generate a profit and loss report by class to see a profit and loss statement for every location as well as a summary of all of them. This will enable you to track the profitability of every restaurant as well as the restaurant group as a whole.
You should examine this profit and loss statement to look for issues as well as opportunities in order to assess the profitability of each restaurant location.
For example, you have multiple restaurants in San Diego, you must go for specialized bookkeeping services in San Diego, Las Vegas, Los Angeles, etc., because the efficiency of bookkeeping can be improved.
You Should Outsource Multi-Location Restaurant Bookkeeping
All of the points listed above require extensive investment from your restaurant group as setting up and maintaining multiple-location locations requires infrastructure and resources that keep pace, especially for expanding restaurant enterprises.
Infrastructure and resources must maintain the pace of growing restaurant businesses. Outsourcing to professionals with a history of accounting and bookkeeping for restaurants can be highly beneficial.
In addition to saving money by accessing expertise and boosting the bottom line at the same time, outsourcing to a relevant provider provides several important advantages. Outsourcing allows you to avoid the hassle and expense of setting up infrastructure on your own. They also know how to do it the best way possible.
We at IBN Tech, provide a range of customized accounting and bookkeeping services for restaurants with multiple locations. If you’re looking for someone to take care of your multi-location restaurant group’s accounting, you should get in touch with our experts.