RESTAURANT
ACCOUNTING
Mower & Associates, CPA
1833 S Millennium Way Suite 100
Meridian, ID 83642
(208)342-5905
paul@mowercpa.com
Mower & Associates, CPA
1833 S Millennium Way Suite 100
Meridian, ID 83642
(208)342-5905
paul@mowercpa.com
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•
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Mower & Associates is focused on increasing restaurant
profitability.
M&A offers management solutions for single and multi-unit
restaurants.
M&A takes responsibility for payroll, accounts payable,
financial reporting and tax preparation off your plate.
Plus, you have electronic access to restaurant-specific
spreadsheets and forms.
We personally help you analyze your reports to find more
profit.
Give us your data from anywhere around the U.S. and we will
help your restaurant prosper.
MORE CONTROL
MORE PROFIT
CONTROL
POTENIAL PROFIT
IMPACT
Weekly P&L
2%
Purchasing and Receiving
1%
Costing the Menu
2%
Menu Engineering
1%
Perpetual Inventory Controls
1%
Scheduling and Motivation Techniques
2%
Bar Controls
1%
Reducing General Expenses
1%
Installing computerized POS System
3%
Employee Incentive Programs
1%
Fraud Detection
1%
Preliminary Profit Impact
16%
Less Additional Costs
-2%
Net Profit Impact
14%
ATTENTION TO DETAIL
HIGHER PROFITS
In a restaurant grossing $2.5
million, if each server sold two
more desserts per night, profit
would improve 43%.
In a restaurant with $500,000 in
sales, if every employee comes in
¼ hour later, savings would be
$10,000 per year.
A steak house with a 4%
profit, can double profit
to 8%, with careful
cutting of meat.
A pizza restaurant doing $3 million
in sales, can save $80,000 by
accurately weighting each cheese
portion.
Mower & Associates
Restaurant CPA
FINANCIAL STATEMENTS
TOOLS for PROFIT
BALANCE SHEET
Summarizes Assets, Payables and Net Worth
Key accounts on balance sheet
Cash - must agree with bank balance
Inventory - must agree with physical inventory count
Payables - if there are no payables, the
balance sheet and P&L are wrong
STATEMENT OF PROFIT OR LOSS
This statement shows Sales, Expenses, and Profits
Use accrual accounting not cash accounting
Mower & Associates
Restaurant CPA
QUALITY FINANCIAL STATEMENTS
•
Who BEST prepares restaurant financial statements
& tax returns?
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•
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CPA firm specializing in restaurants
Bookkeeper
Any CPA Firm
Common Problems with Restaurant Statements
• None Restaurant Chart of Accounts
• Cash rather than accrual accounting
• Unorganized detail
• No interest on P&L, but loans on balance sheet
• No physical inventory adjustments
• Sales tax reporting errors
Mower & Associates
Paul Mower
Restaurant CPA
Review of Profit and Loss Statements
WE ASK A LOT OF QUESTIONS ABOUT:
SALES
COST OF GOODS SOLD
LABOR
GENERAL EXPENSES
CASH FLOW
Restaurant Owner and Paul Mower, CPA
Compare and Measure Sales
Comparisons
This Week to Last Week
This Week to Same Week Last Year
Compare to other Restaurants
Sales per square foot
Trends
Customer Count
Average Guest Check
Mower & Associates
BREAKEVEN SALES
Step 1 Add up Fixed Costs
Step 2 Add up Variable Costs
Step 3 Calculate Breakeven Sales
Mower & Associates
Breakeven
Computation
Breakeven Sales
Fixed Costs
Subtract Var Cost % from 100%=CM%*
Breakeven
Divide Fixed Costs by CM%
Breakeven Sales
476,417
47.2%
0.00
1,008,691
*CM% = Contribution Margin%
Sales needed for Target Profit
Fixed Costs
Subtract Var Cost % from 100%=CM%
Target Profit
Divide [Fixed Costs + Target Profit] by CM%
Sales needed for Target Profit
476,417
47.2%
50,000
1,114,553
COST OF GOODS SOLD
If Cost of Goods are high, check for:
Spoilage and Waste
Purchase and Receiving Shortages
Employee Theft
Under reported Sales
Calculate exact foods costs each period (weekly)
Food cost occurs when the food is used, not when the food bill is paid
Step 1 Count merchandise received during the period
Step 2 Count inventory
Step 3 If inventory increases, subtract the increase from purchases
If inventory decreases, add the decrease to purchases
Example
Purchases
$4,000
Inventory Decrease
500
COGS
$4,500
Restaurant Owner and Paul Mower, CPA
Review Labor Costs
Factors that Affect Labor Costs
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Sales
Type of Restaurant
Capability of employees
Analyzing Costs
• Compare labor costs to other restaurants
• Review labor on a daily basis
• Set goals for labor costs
• Labor Schedule based on Hourly Customer Count
Mower & Associates
DAILY LABOR SCHEDULE
M
G
R
HOURS
Customer
Count
C
H
E
F
C
O
O
K
P
A
N
T
R
Y
H
O
S
T
E
S
S
W
A
S
H
E
R
S
E
R
V
E
R
S
E
R
V
E
R
S
E
R
V
E
R
B
U
S
B
A
R
B
A
R
B
A
R
S
E
R
V
E
R
9
12
11
9
5
9
8
8
6
9:00
10:00
1
11:00
6
12:00
23
1:00
5
2:00
3:00
4:00
3
5:00
12
6:00
30
7:00
8
8:00
3
9:00
1
10:00
1
11:00
Count
Hours
93
114
9
9
8
1
1
GENERAL EXPENSES
CONTROL
EXPENSE
STANDARD
PERCENTAGE
OF SALES
Laundry and Linen
Equipment replacement
Supplies
Advertising
Full Service
Fast Food
1.3%
1.6%
1.7%
Utilities
Office
Telephone
Insurance
Credit Card Discount
AMEX
VISA
2.6%
0.5%
0.5%
2.2%
Repairs
Interest
Rent
Full Service
Fast Food
1.8%
9.0%
2.1%
4.1%
2.9%
1.9%
5.5%
6.1%
THE MENU
Menu Costing
Menu Pricing
Menu Engineering
MENU COSTING
Steak Dinner
Item Ingredient
Unit
Unit
Price
Portion
Cost per
Portion
Steak
Ounce
0.96
10 oz
$ 9.60
Vegetable
Lbs.
0.96
3 oz
$ 0.18
Baked Potato
Each
0.12
1
$ 0.12
Sour Cream
Quart
1.25
4 oz
$ 0.16
Butter
Pound
1.61
2 oz
$ 0.20
PLATE COST
$ 10.26
MENU PRICING
Three ways to price a menu
• Compare to competitors
• Food cost percentage for target profit
• Add profit, overhead and food cost for each
item
MENU ENGINEERING
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Rate each menu item
A
Popular and Profitable
B
Popular Only
C
Profitable Only
D
Unpopular and Unprofitable
•
Based on Rating
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•
•
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Eliminate items
Change the price of items
Refocus the menu placement
Change the way the items are prepared
Add new items to revitalize the menu
Mower & Associates
Menu Engineering
Menu Engineering
%
Total
Total
Menu
Items
Sold
Gross
Selling
Food
Profit
Price Per
Cost
Per
Menu
Item
Total
Food
Cost
Total
Menu
Sales
Gross
Profit $
E
F
G
H
(A x B)
(A x C)
(F-E)
(E / F)
Food Popular Profit Overall
Cost % Rating Rating Rating
Description
Column
A
B
C
D
(C-B)
New York Steak
17%
200
7
17
10
1,400
3,400
2,000
41%
A
A
A
Fajita
19%
185
3
10
7
555
1,850
1,295
30%
A
A
A
Seafood fettuccini
Sirloin
10%
9%
95
85
5
4
15
13
10
9
475
340
1,425
1,105
950
765
33%
31%
A
B
B
B
B+
B
Roasted chicken
7%
65
3
13
10
195
845
650
23%
B
B
C+
Eggplant
7%
70
4
12
8
280
840
560
33%
B
B
B
Shrimp
7%
65
5
13
8
325
845
520
38%
C
C
C
Salmon
5%
45
5
16
11
225
720
495
31%
C
C
C
Fish & Chips
7%
68
2
9
7
136
612
476
22%
C
C
C+
Radiatore Pasta
8%
78
3
9
6
234
702
468
33%
C
C
C+
Snow Crab
3%
25
5
13
8
125
325
200
38%
D
D
D
Seared Venison
1%
7
12
22
10
84
154
70
55%
D
D
D
Hamburger
2%
20
1
3
2
20
60
40
33%
D
D
D
100%
1008
4394
12883
8489
34%
Total
Average
78
653
Value for your $
Mower & Associates, CPA
1833 S Millennium Way Suite 100
Meridian, ID 83642
paul@mowercpa.com
(208)342-5905
Paul Mower
Restaurant CPA