7 Restaurant Accounting Questions You Should Be Asking


Did you know 46% of all small businesses fail because of bookkeeping errors?

Would you believe that cash flow problems wipe out another 82%?

And that overall, restaurant industry sales are down 1.3%?

These stats are no joke.

They prove that good bookkeeping and accounting processes are must-haves for keeping your restaurant alive.

They also point to the fact that it’s important to have systems, processes, and communication with your accountant so you understand where your business stands and how you can improve it.

Sure, a deep dive into your accountant’s processes might seem like the last thing you want to do. After all, you have a million moving parts to think about every day.

But the right questions can lead to answers that ultimately prevent your restaurant from becoming just another statistic.

Because accounting can improve all other aspects of your business, we’ve put together 7 questions restaurant owners needs to ask their accountants.

#1: Do you use restaurant-specific accounting processes?

Restaurants are a unique industry. The chart of accounts, transaction processing, and reporting that go along with it are unique, too.

While you didn’t go to school for accounting, the person you hire to manage your books did.

He or she should not only be well versed in general accounting best practices, but how to avoid critical restaurant accounting mistakes, too.

And good restaurant accountants should follow restaurant industry best practices.

They should know how to allocate balance sheet accounts, income and expense accounts, and accounts detail like direct operating expenses.

#2: Do you use cloud-based software or apps?

Your accountant should be using cloud-based – or online – software and restaurant accounting apps to do your bookkeeping and accounting.

Using online software means you can access your accounting records anytime and anywhere there’s a connection to the internet.

Because everything is updated and stored online, you don’t have to worry about losing information.

No hard drive crashes where you lose everything.

No static spreadsheets where you can’t see your numbers in real time.

Instead, online software and apps eliminate the need to send backup files. They give you real-time information sharing between you and your accountant.

And that kind of efficiency is a godsend for a busy restaurant manager who only has so many hours in a day.

Your accountant should be using modern technology to manage your books… spreadsheets are a thing of the past.

#3: Does your accounting software integrate with your POS and automatically reconcile sales and bank deposits?

Your accountant’s software (QuickBooks, QuickBooks Online, Sage, etc.) should integrate with your POS. If it does, your sales and bank deposits will reconcile themselves automatically.

If these two systems aren’t connected, you’ve got a problem.

Manual reconciliation can be an error-prone process.

It leaves you at risk for fraud or mistakes that could cost you your business. Automatic reconciliation will ensure what’s put into your POS hits the bank when it’s supposed to.

Your accountant can then easily monitor your statements for any unusual or fraudulent activity.

#4: Do you monitor cash tips?

Cash tips are self-reported by servers. And your accountant should be monitoring the percentage of these cash tips versus cash sales.

This ratio should be close to the tip ratio of credit card tips versus credit card sales.

Why is this a big deal?

Having your accountant keep an eye on this will discourage your servers from being tempted to keep more tips than what they actually made.

And you’ll sleep better at night knowing nothing fishy is going on.

 #5: Do you allocate payroll between FOH and BOH?

Restaurant accountants are often tempted to lump together FOH and BOH payroll. It can seem easier to count it as one big expense.

But a good restaurant accountant will actually drill down into your personnel expenses to, at the very least, FOH (host/hostess, servers) and BOH (kitchen, busboys).

Some even go one step further, breaking out payroll by specific roles… server, chef, line cook, etc.

Why would your accountant get this detailed?

Well, the more specific you can get listing payroll expenses, the greater your ability to see exactly where your business is profiting… or exactly where you’re losing money.

#6: Do you adjust inventory on a weekly basis?

Managing your inventory is about maximizing your cash flow and minimizing theft, spoilage, and waste. Tracking and managing inventory on a weekly basis leads to better visibility into your costs by seeing Cost of Goods Sold (COGS).

Without an inventory count, you can’t see how much you have on hand.

Without knowing how much of each item is on hand, you can’t look up the price you paid for it.

And without the prices of your food, your accountant can’t calculate COGS.

Using COGS, your accountant will be able to see exactly where you’re overspending on food, if you’re over ordering, or if someone is stealing from you.

And when food costs are going up and profits are going down, you have no choice but to keep a close eye on your inventory costs.

#7: Do you work with other restaurant owners and do you understand key restaurant metrics and what they should be for my business?

Ask your accountant how many other restaurants he or she works with. Ideally, you want to use a restaurant-specific accountant.

Find out what other restaurant’s goals are as far as profits and losses, labor costs, and food costs. Your accountant can provide these in percentage increases or decreases.

How will doing this help you?

It will give you a perspective into what other businesses in your industry are reaching for. It can give you a standard to meet.

Set up similar goals specific to your business to work toward.

There are other financial numbers your accountant and you should monitor closely, too. These include prime cost as a percentage of sales and BOH cost as a percentage of food sales.

Knowing these numbers is great… but they’re useless if you don’t learn from them and change your business because of them.

That’s why it’s important to make sure your accountant is updating you about industry benchmarks and that you’re on the same page about your restaurant’s financial goals.

You Can Count on This

Your accountant is knee-deep in your restaurant’s numbers every day.

Like it or not, you depend on this person to help you keep your business healthy. And that’s why it’s so important to make sure you’re on the same page.

By asking these 7 questions, you’ll make sure you have an accountant who understands your industry, uses modern technology & processes, and cares about the growth of your business.

Good restaurant accountants want to see the success of your business as much as you do.

They can help you bring down costs, increase profits, and alert you to theft and fraud. They’ll help you with a strategy to grow your business.

And they’ll prevent the bookkeeping errors and cash flow problems that could close your doors.


This post was contributed by Levi Morehouse. Levi is the CEO and Founder of Ceterus, a restaurant accounting firm. Ceterus is a Certified Restaurant365 Partner. Ceterus combines the expertise of professional accountants with cutting edge technology so you can ditch the hassle of managing your books. Follow Ceterus on Facebook, Twitter and LinkedIn.

Why take the time to create a budget for my restaurant?


These are the Big 3 Benchmarks of Performance in the Restaurant Industry:

  1. Same-Store Prior Year
  2. Location Side-by-Side
  3. Budget

 What are the merits of each and is doing a budget even worth it?

The most common financial and operational benchmark for a restaurant is comparing performance of the same store to the same time period of the previous year.

This is known as ‘Same-Store _______________” (you insert the metric you want – i.e. Sales, Guest Count, SPLH, Prime Profit, etc.)

Same-Store Prior Year is an important metric to be sure as it can alert an operator of things that have fallen out of the normal ratio for that same-store and thus where immediate action should/can be taken to rectify it.

Each location is unique to some degree and when all else is equal, the same-store performance the previous year is a great way to measure current year performance. However, it does have its limitations.

For example, one industry veteran told me his staff would commonly joke that if you wanted to make any poor performing period look good, just make the previous year look the same and no one would bat an eyelash. There is a need to look at your business through multiple lenses.

The second most common analysis in the restaurant world is comparing store performance to other restaurant locations within the same company for the same time period. This is referred to a Location Side-by-Side analysis.

This form of performance comparison is also helpful in identifying warning signs and opportunities across your multi-unit brand but the greatest benefit is an intangible one: it can drive manager motivation. People love to compete. They like seeing their store at the top.

Restaurant365 is one application that has taken this to the next level. They have an exciting feature that allows managers to see the P/L’s of other locations within the company without revealing which location they are looking at except their own. The manager can see where they ‘rank.’ This gamification of the data is helping promote excellence within the manager ranks and changing the tone of weekly manager meetings for the better.

The third benchmark restaurants use to measure performance is against a budget. There are many reasons people take the time to prepare a restaurant budget each year – and there are many people who purposefully don’t take the time. For those that do, it is often done out of compliance for an outside investor and completed by the CFO or accounting department. For those that don’t, a common excuse we hear is, “I don’t have the time to analyze any variances.

Besides, the minute I complete my budget it is obsolete and irrelevant because of the ever changing nature of my business.”  There is some truth in these comments and realities we cannot deny.

Why then, go to the trouble of preparing a restaurant budget and who should do it? The best answer is because of what it teaches the person who does it and secondly, everyone from the restaurant manager on up.

The exercise of preparing a budget teaches you the business. In other words, it reveals how the business makes money or loses it. There are ‘levers’ in the business that when pulled, drive profits or losses. Restaurant managers who understand these ‘levers’ are in the best position to make recommendations to the company on how to control them.

Managers who help create the company plan as to how to use the ‘levers’ have more buy-in and ownership to the results. Luck will always be on your side when managers are fully bought-in.

In the end, is budgeting worth it? It is not only worth it, but when combined with same-store prior year and location side-by-side analysis, it is critical for all restaurant business hoping to maximize their return on capital.

Morgan D. Harris CPA, Co-founder, Restaurant365


Restaurant365 Adds Pictures to Company Announcements

One of the new features of Restaurant365 is the ability to upload images directly from your mobile phone on our R365 App.

You can have managers upload images of LTO menu items or the picture of an employee on their birthday.  Think of it as Instagram within your own company!


Morgan Harris

Co-founder  |  Restaurant365


Over 30 POS Integrations

We recently completed our 31st POS integration, which is specifically tailored to the restaurant industry.  Detailed (not summary) data from your restaurant point-of-sale is directly pulled into Restaurant365 including Sales Tickets, Tenders, Payment Types, Clock-in/Clock-out by Job and Employee for the automatic creation of:

  • Daily Sales Journal Entries in the Accounting Module
  • Daily Labor Accrual Journal Entries in the Accounting Module
  • Menu Item Sales for Business Analytics and Reporting
  • Labor Details for Business Analytics and Reporting

Visit here to learn more about our POS Integrations.



Online & Mobile Restaurant Scheduling

Online & Mobile Restaurant Scheduling 

Why would you use a spreadsheet or a generic online scheduling tool that didn’t automatically drive off your sales forecasts and labor budgets?  You really shouldn’t.

  • See projected labor profitability for the schedule while creating schedules
  • See weather, sales forecast while scheduling each day
  • Compare your schedule to actual hours worked at the end of the week and throughout the week
  • See a quick view  of who should be working right now
  • Copy schedules from prior weeks
  • Alert employees of schedule and announcements via text/email

For more information visit here.

Mobile App for iOS and Android Update

Mobile App for iOS and Android Update

  • Additional Enhancements to Stock Counts
  • Improved Usability on different device sizes
  • Mobile Reports – Daily Sales Report
    • ​Sales by Store
    • Sales by Day Part
    • Check Count
    • Avg Check
    • Labor Percent
    • Cash Deposit
    • Totals by Day, Prior 7 Days, Week to Date, & Period to Date



LeBron James Becomes Spokesperson for Blaze Pizza

Restaurant365 is pleased to hear that Blaze Pizza, who utilizes our award winning software as their management platform, announced LeBron James as their official spokesperson. Blaze Pizza is a growing pizza franchise that mirrors a Chipotle style concept. Their build your own idea is changing the casual dining industry. Consumers can choose from the simplest of ingredients or a complex pairing of a variety of toppings.

LeBron James has been one of the original investors in Blaze Pizza since 2012. LeBron will be an ambassador for the brand with a significant marketing push on social media. With over 24 million followers on Twitter James will have a huge affect on the company.

We are excited for this partnership and know this is a slam-dunk!

For official announcement please visit here.

Restaurant365 RFDC 2015

Restaurant365 will be again be attending RFDC this November.   We will have a booth, as well as, a  private meeting room at the conference.  We will be showcasing our full restaurant software management platform, including integration with your existing POS, real-time restaurant financials, mobile stock count apps for iOS and Android, business analytics across the enterprise, and how we can help your restaurant group go paperless.  If you’d like to set up a meeting at the conference, please contact us.

Looking forward to seeing you there!


Enhanced Business Analytics

In addition to our restaurant-specific financial and operational reports, we have released a new enhanced business analytics module for Restaurant365. Along with the upgraded standard dashboards, Restaurant365 Business Analytics enables you to build your own custom charts, create your own ad-hoc queries, and customize your own dashboards. Put the metrics that matter the most to you in front of your managers.

Restaurant365 brings your restaurant locations’ accounting, inventory, banking, daily sales, labor analytics, food costs, recipes, above store reporting, and more into one unified platform.




computer, laptop, mobile phone and digital tablet pc

Restaurant365 Announces Major System Update

We are pleased to announce the roll-out of a major system update of our restaurant-specific accounting and operational software platform. This update includes many enhancements, including additional features, further speed increases, and most importantly, can be used on multiple browsers and devices including PC, Mac and tablet devices. It is the first and only true cloud-based, restaurant-specific accounting software to run natively on Mac OS devices.

As part of Restaurant365’s software as a service, all customers automatically receive this update as part of their service. No additional software fees or implementation service fees are part of this upgrade. To learn more or to see a demonstration of the newest release, please visit