woman and man working on a laptop and a notebook


woman and man working on a laptop and a notebook

Arben Ymeraga,4 minutes read

Restaurant owners have one of the most demanding jobs – providing delicious and fresh food.

Successful restaurants thrive on delicious food, a high level of service and hygiene, but that’s not all. A very important part is managing such a business, which is another complete story.

Running a restaurant is the same as running any other business. You need to make sure your finances are well managed and that means knowing one thing (or 100) about restaurant accounting and finances. It is not enough just to collect your daily shopping.

But how to deal with a restaurant’s accounting if you don’t have any experience? How to monitor cash flow, the cost of a menu, overheads and most importantly, how do you determine the overall financial health of your restaurant? If your restaurant is visited by many customers, that would mean the business is financially successful, right? Not always.

There are many indicators of a restaurant’s financial health except customers traffic. 

Bookkeeping and accounting are very important for understanding financial statements.

No matter who is keeping you accountable at your restaurant, the following guidelines will help you to own your finances so that you can continue to serve delicious and fresh food to your customers. Below are some tips from successful restaurant managers.

Monitor Primary Costs on a daily basis

If you don’t monitor your expenses every day, you lose one of the simplest ways to increase profitability. To run a restaurant that is truly profitable it is essential to monitor key performance indicators (KPIs).


Your kitchen is the main place where you can reduce costs and increase production. Monitoring what goes in and out of your kitchen will allow you to focus on reducing waste and costs. Here are some culinary management KPIs that we suggest you follow:

Cost of Goods Sold (COGS) – If you only follow one indicator in your kitchen, then this indicator is a must. The cost of goods sold is the biggest cost for any restaurant; Understanding menu product norms and figuring out where to cut costs is a key factor in increasing your profitability.

The popularity and profitability of an item on the menu- How you set item prices in the menu affects profitability. Do you know which food gives the most return and how much that item is being sold? High profit on a menu is fine, but if not sold enough it doesn’t carry weight. Perhaps items that are being sold quickly but with a lower profit margin may be the main revenue channel of a restaurant. Without this information you cannot redesign new menus and make decisions for different promotions. Once you have this information, with the help of  today’s technology you can promote a certain product, set point of sale, certain days of the week or even product combinations.

Stock management and waste disposal food- are a major challenge in the restaurant industry. Every restaurant manager aims to always have ingredients foods that are fresh and in sufficient quantities to handle orders. Keeping track of what is sold in a timely manner and maintaining minimum quantity information is essential. A KPI is the stock rotation that is calculated as the net sales divided by the average cost of the stock. On the other hand, tracking waste disposal food  helps you to make better plans. Also, helps you buy when and what you need, leeding to better warehouse management by always providing fresh items. This may help eg. even in determining the portion of a food or if you need to resize the portion or the way you serve it.

If you have a well registered plan for waste disposal food system- It can be counted as an expense that affects over tax declaration.It is also important to track product expirations and defects that provide a more complete stock information for a given period.

Customer management

Your customers are the most important part of your restaurant. Measuring what makes them happy and returning them to you is very valuable when it comes to determining what to change, maintain or improve. You may consider following the KPI as below:

Sales of food and drinks for guest:

Identify which menus are most appealing to guests and identify in which parts of the day are the highest sales in the restaurant. Tracking  this information will help you make menu corrections such as: removing from the menu products that are not performing well and adversely affecting profitability, or the slight increase in prices on the best-selling foods that help you increase margins.These measurements can help you to  know what time to make certain promotions, happy hours, ie how to manage prices at a specific time.

Seat Revenue – Revenue per seat or desk per hour is very important for profitability. If the seats are empty, you have a problem with profit. By measuring current hourly revenue, divided by the number of seats / desks you can improve profitability per hour.

Marketing and Sales 

Even though customer care and food preparation are a key part of your job, you can’t escape the rest of the office work. Analyzing sales and understanding how investing in marketing helps you increase revenue. This is essential with a good overview of cash flow. You might consider offering a loyalty program for clients who visit you frequently.

Finally there are many different indicators that will help you track the financial performance of your restaurant. The moment you decide on these KPIs you have to find a way to measure them, so these are steps you should follow:

Invest in a good Point of Sales (POS) application that integrates with the financial system. This is one of the best decisions that will help you increase the profitability of the restaurant.Such a system will help you to have:

Detailed sales analysis for each product, time and cost. Also it  will help you develop promotional strategies. 

Track receivable and payable accounts

Reconsider cash, bank, credit card

With real-time synchronization you will have financial statements at all times and perform profitability analysis at any time

Bonus – You can look into hiring a digital accountant who is experienced in the restaurant industry so you can focus on the key things that keep your customers happy and keep coming to you.