Accounting for restaurants and retail
Restaurants run on daily volume and thin margins, which means the books have to be right at a level of detail most businesses never need. Sales, tips, comps, and card settlements all have to reconcile every day, because a small percentage error compounds fast at this volume.
What this trade does to a set of books
The point of sale does not match the bank
Card settlements arrive net of processing fees and a day or two late. Recording the deposit as revenue understates sales and hides the fee, which is often a meaningful cost at restaurant volume.
Tips are a payroll problem
Tips flow through the register but are owed to staff, and they carry reporting and withholding obligations. Treated as revenue they inflate sales and create a tax problem.
Food cost drifts quietly
Cost of goods as a percentage of sales moves with waste, portioning, and supplier pricing. Without inventory at period end the number is a guess, and by the time it shows up in profit it has been wrong for months.
Labor moves week to week
Scheduling decisions are made weekly but usually reviewed monthly, long after the payroll has run and the money is spent.
Included for restaurants and retail
- Daily sales reconciled from the point of sale to the bank
- Card processing fees recorded separately, not netted into sales
- Tips tracked and coordinated with payroll
- Cost of goods with period-end inventory, tracked as a share of sales
- Labor cost by week against sales
- Sales tax prepared and filed on your state's schedule
Asked by owners in this trade
Why do my point of sale sales never match my bank deposits?
Because the deposit is net and delayed. Card processors take their fee before depositing and typically settle a day or two behind, so a deposit rarely equals a day's sales. The correct treatment is to record gross sales from the point of sale, record the processing fee as its own expense, and reconcile the deposit against both. Netting them hides a cost that often runs two to three percent of card volume.
How should tips be handled in the books?
Tips are not revenue. Money left for staff is a liability from the moment it is collected until it is paid out, and it carries reporting and withholding obligations that run through payroll. Recording tips as sales overstates revenue, distorts every percentage you measure against sales, and creates a tax problem that surfaces later.
What food cost percentage should I be running?
It varies by concept, but the more useful question is whether yours is moving. A number that drifts upward two or three points over a few months signals waste, portion drift, or supplier price increases you have not passed through, and each has a different fix. That is only visible if inventory is counted at period end, because without it cost of goods is an estimate.
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