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Entering the restaurant industry likely stemmed from a passion for food, not a desire to crunch numbers. And as you grow your business, the financials can become overwhelming.
How is accounting different for more than one location? What needs to be tracked now? What’s the difference between accounting and bookkeeping exactly?
Knowing the basics of accounting will help you understand your accountant, software, and business better, enabling you to make better data-driven decisions for sustained profitability and growth as you scale.
In this guide, we’ll cover everything you need to know about accounting for multi-location restaurants, clarify common accounting terms, and explore essential accounting features that contribute to the financial growth of a restaurant chain.
Whether you're new to multi-location management or seeking to refine your existing processes, this guide will provide the insights you need to scale successfully.
Leave the pen and paper behind and upgrade your restaurant’s financial management with a Restaurant Profit and Loss (P&L) Template. Gain visibility into your restaurant's financial performance and drive profitability.
Ressource herunterladenRestaurant accounting is more than just balancing books; it's an in-depth process of recording, analyzing, and interpreting financial information. It influences business decisions, as owners and managers have a clear picture of their restaurant’s financial health.
While some may use the terms bookkeeping and accounting interchangeably, they each have their own distinct purposes within a restaurant's financial management.
So what are the main differences?
Bookkeeping is the action of recording-keeping and staying financially organized. This means maintaining accurate, up-to-date information that reflects the financial health of a restaurant.
This involves maintaining up-to-date sales records, tracking expenses, properly documenting receipts and invoices, reconciling bank statements, and keeping track of payroll records.
Accounting, on the other hand, takes the data from bookkeeping and generates financial statements, analyzes financial data, and provides insights guide business decisions.
Diligent accounting practices give restaurant chains the forecasting and analytical tools that are essential for planning for seasonal fluctuations, benchmarking performance across various locations, and identifying expansion opportunities.
By harnessing these insights, restaurant chains are able to make financially accurate decisions and plan for operational improvements and cost efficiencies.
The main difference in restaurant accounting for multi-location operations versus a single unit lies in the scope and scale of financial management.
Enterprises need a consolidated approach, focusing on standardized reporting and benchmarking to compare performance across all locations.
This added complexity impacts financial reporting, which requires a certain level of detail to meet franchise agreements and investor expectations. Similarly, cost control, budgeting, and inventory management should scale to fit the larger operational framework.
When it comes to restaurant accounting, you can choose between two methods: cash basis and accrual basis accounting. Each has its own way of tracking money, and the best choice can depend on the size and complexity of your operations.
Cash basis accounting is the most popular method for smaller restaurants for its simplicity. This method records income and expenses as the cash changes hands. This means you note sales as you get paid and expenses when you pay them. For restaurants with multiple daily cash transactions, this method makes it easier to view how much cash you have on hand at any given moment.
Accrual basis accounting records income and expenses as you earn or incur them. Simply put, you record earnings as sales come in, not when you’ve received the money, and you input expenses when you’re billed, not when you pay them. This method gives a clearer picture of a restaurant’s finances over the long term, making it particularly useful for larger, multi-location restaurants with more complex finances. It aids in managing the timing of income and expenses more accurately by viewing not just cash flow, but also other financial commitments.
There are certain KPIs that every franchise should measure, among them being gross profit margin, Percentage of a Strategic Category, and ATV to name a few.
Enterprises can track other critical measurements like revenue, COGS, expenses, and net profit by utilizing P&L statements that provide key insights into cash flow.
A hired accountant will help you determine which KPIs to focus on in order to meet your business objectives and goals. Knowing certain key terms can help you communicate with your accountant and bookkeeper and be part of key financial conversations.
Break-even analysis helps enterprises determine when each unit will start to generate profit.
This financial measurement calculates the point at which a location’s total revenue equals its total expenses, meaning there’s no net loss or gain.
Key break-even analysis components include:
In multi-location operations, perform this analysis individually for each restaurant and collectively across the chain. Knowing the break-even point of each location will help you manage financial risks, make informed cost-cutting decisions, set sales targets, and drive profitability.
A restaurant’s chart of accounts (COA) is a record of all financial transactions including assets, liabilities, equity, expenses, revenue, and cost of goods sold (COGS).
For independent restaurants, their COA primarily focuses on the basic categories needed to manage a single location. Categories typically include revenue, cost of goods sold (COGS), payroll, utilities, rent, and general and administrative expenses.
For larger operations, there are often separate accounts for each location or segment to facilitate more specific financial analysis and reporting. The COA might have more detailed breakdowns of expenses and revenues for comparative analysis and strategic financial management across the chain.
It provides a structured way to organize and manage financial data across multiple locations, helps maintain financial reporting compliance, which can vary in requirements from one location to the next, and streamlines accounting processes, making it easier to implement and use accounting software.
As a business grows, the more cost savings they experience. This is referred to as Economies of Scale. As an enterprise grows, restaurateurs can leverage its size to save money.
This can be done through inventory bulk ordering from multiple vendors, standardize employee training, and spread marketing costs across all restaurants.
Achieving economies of scale can significantly reduce per-unit costs and enhance profitability across the chain.
Capital expenditures (CapEx) refer to the funds used by a restaurant to acquire, upgrade, and maintain physical assets such as property, buildings, or kitchen equipment.
For chains, CapEx is crucial for funding expansion projects, refurbishing existing units, and purchasing new technology.
The sales mix of a restaurant enterprise looks at how much each menu item contributes to the total sales.
By understanding their sales mix, a restaurant can see the popularity and profitability of each items, helping them understand customer preferences and decide if they need to make changes to the menu.
Implementing recipe costing software puts restaurateurs in the driver’s seat of their menu profitability. Build margin-rich recipes with ingredient-level breakdowns, generate powerful profitability reports that dynamically update with each inventory delivery, and identify usage variances all on one platform.
EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, is used to evaluate a business's profitability by focusing on the income generated from its core operations.
Depreciation is the process of allocating the cost of tangible assets (such as equipment, buildings, and vehicles) over their useful lives. This accounting method helps to spread out the expense of an asset over the period it is used, reflecting wear and tear, aging, or obsolescence.
Amortization is similar to depreciation but applies to intangible assets (such as patents, trademarks, and goodwill). It involves spreading the cost of these assets over their useful lives, helping to match the expense with the revenue they generate.
The ability to scale is critical for restaurant chains planning to expand.
Choose accounting software that manages increasing transaction volumes efficiently, supports new business models such as online ordering, and integrate new locations without disruption.
Software that is flexible meets your business’s requirements and goals and it grows and evolves.
Restaurant chains face the challenge of operating across multiple jurisdictions, each with its own set of regulatory standards and tax requirements.
Effective accounting software ensures compliance with these different regulations and maintains consistency in financial practices across all locations.
Financial reporting is at the heart of effective accounting software. Restaurant chains require detailed, accessible reports that provide deep insights into the overall financial health of the business.
Key reports include balance sheets, profit and loss statements, and cash flow statements. The software should allow for easy comparison of financial data over different periods and highlight trends that can guide strategic decisions.
The best accounting software seamlessly fits into your current tech stack. Integration with other restaurant software is key to enhancing operational efficiency, reducing manual errors, and streamlining processes.
Effective integration with inventory management systems and POS (Point of Sale) systems ensures that sales data, stock levels, and financial transactions are automatically updated and synchronized. This real-time data flow helps in maintaining accurate financial records, optimizing stock levels, and providing valuable insights for better decision-making.
MarketMan integrates with the top accounting software, enabling restaurateus to push payments without GL coding or manual entry, easily snap photos of their invoices, and access advanced reporting to track price changes, purchase patterns, and COGS. Book a demo today to learn how you can gain a personalized bookkeeper in your pocket to automate your accounts payable process.
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Calculate ROIEntering the restaurant industry likely stemmed from a passion for food, not a desire to crunch numbers. And as you grow your business, the financials can become overwhelming.
How is accounting different for more than one location? What needs to be tracked now? What’s the difference between accounting and bookkeeping exactly?
Knowing the basics of accounting will help you understand your accountant, software, and business better, enabling you to make better data-driven decisions for sustained profitability and growth as you scale.
In this guide, we’ll cover everything you need to know about accounting for multi-location restaurants, clarify common accounting terms, and explore essential accounting features that contribute to the financial growth of a restaurant chain.
Whether you're new to multi-location management or seeking to refine your existing processes, this guide will provide the insights you need to scale successfully.
Leave the pen and paper behind and upgrade your restaurant’s financial management with a Restaurant Profit and Loss (P&L) Template. Gain visibility into your restaurant's financial performance and drive profitability.
Ressource herunterladenRestaurant accounting is more than just balancing books; it's an in-depth process of recording, analyzing, and interpreting financial information. It influences business decisions, as owners and managers have a clear picture of their restaurant’s financial health.
While some may use the terms bookkeeping and accounting interchangeably, they each have their own distinct purposes within a restaurant's financial management.
So what are the main differences?
Bookkeeping is the action of recording-keeping and staying financially organized. This means maintaining accurate, up-to-date information that reflects the financial health of a restaurant.
This involves maintaining up-to-date sales records, tracking expenses, properly documenting receipts and invoices, reconciling bank statements, and keeping track of payroll records.
Accounting, on the other hand, takes the data from bookkeeping and generates financial statements, analyzes financial data, and provides insights guide business decisions.
Diligent accounting practices give restaurant chains the forecasting and analytical tools that are essential for planning for seasonal fluctuations, benchmarking performance across various locations, and identifying expansion opportunities.
By harnessing these insights, restaurant chains are able to make financially accurate decisions and plan for operational improvements and cost efficiencies.
The main difference in restaurant accounting for multi-location operations versus a single unit lies in the scope and scale of financial management.
Enterprises need a consolidated approach, focusing on standardized reporting and benchmarking to compare performance across all locations.
This added complexity impacts financial reporting, which requires a certain level of detail to meet franchise agreements and investor expectations. Similarly, cost control, budgeting, and inventory management should scale to fit the larger operational framework.
When it comes to restaurant accounting, you can choose between two methods: cash basis and accrual basis accounting. Each has its own way of tracking money, and the best choice can depend on the size and complexity of your operations.
Cash basis accounting is the most popular method for smaller restaurants for its simplicity. This method records income and expenses as the cash changes hands. This means you note sales as you get paid and expenses when you pay them. For restaurants with multiple daily cash transactions, this method makes it easier to view how much cash you have on hand at any given moment.
Accrual basis accounting records income and expenses as you earn or incur them. Simply put, you record earnings as sales come in, not when you’ve received the money, and you input expenses when you’re billed, not when you pay them. This method gives a clearer picture of a restaurant’s finances over the long term, making it particularly useful for larger, multi-location restaurants with more complex finances. It aids in managing the timing of income and expenses more accurately by viewing not just cash flow, but also other financial commitments.
There are certain KPIs that every franchise should measure, among them being gross profit margin, Percentage of a Strategic Category, and ATV to name a few.
Enterprises can track other critical measurements like revenue, COGS, expenses, and net profit by utilizing P&L statements that provide key insights into cash flow.
A hired accountant will help you determine which KPIs to focus on in order to meet your business objectives and goals. Knowing certain key terms can help you communicate with your accountant and bookkeeper and be part of key financial conversations.
Break-even analysis helps enterprises determine when each unit will start to generate profit.
This financial measurement calculates the point at which a location’s total revenue equals its total expenses, meaning there’s no net loss or gain.
Key break-even analysis components include:
In multi-location operations, perform this analysis individually for each restaurant and collectively across the chain. Knowing the break-even point of each location will help you manage financial risks, make informed cost-cutting decisions, set sales targets, and drive profitability.
A restaurant’s chart of accounts (COA) is a record of all financial transactions including assets, liabilities, equity, expenses, revenue, and cost of goods sold (COGS).
For independent restaurants, their COA primarily focuses on the basic categories needed to manage a single location. Categories typically include revenue, cost of goods sold (COGS), payroll, utilities, rent, and general and administrative expenses.
For larger operations, there are often separate accounts for each location or segment to facilitate more specific financial analysis and reporting. The COA might have more detailed breakdowns of expenses and revenues for comparative analysis and strategic financial management across the chain.
It provides a structured way to organize and manage financial data across multiple locations, helps maintain financial reporting compliance, which can vary in requirements from one location to the next, and streamlines accounting processes, making it easier to implement and use accounting software.
As a business grows, the more cost savings they experience. This is referred to as Economies of Scale. As an enterprise grows, restaurateurs can leverage its size to save money.
This can be done through inventory bulk ordering from multiple vendors, standardize employee training, and spread marketing costs across all restaurants.
Achieving economies of scale can significantly reduce per-unit costs and enhance profitability across the chain.
Capital expenditures (CapEx) refer to the funds used by a restaurant to acquire, upgrade, and maintain physical assets such as property, buildings, or kitchen equipment.
For chains, CapEx is crucial for funding expansion projects, refurbishing existing units, and purchasing new technology.
The sales mix of a restaurant enterprise looks at how much each menu item contributes to the total sales.
By understanding their sales mix, a restaurant can see the popularity and profitability of each items, helping them understand customer preferences and decide if they need to make changes to the menu.
Implementing recipe costing software puts restaurateurs in the driver’s seat of their menu profitability. Build margin-rich recipes with ingredient-level breakdowns, generate powerful profitability reports that dynamically update with each inventory delivery, and identify usage variances all on one platform.
EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, is used to evaluate a business's profitability by focusing on the income generated from its core operations.
Depreciation is the process of allocating the cost of tangible assets (such as equipment, buildings, and vehicles) over their useful lives. This accounting method helps to spread out the expense of an asset over the period it is used, reflecting wear and tear, aging, or obsolescence.
Amortization is similar to depreciation but applies to intangible assets (such as patents, trademarks, and goodwill). It involves spreading the cost of these assets over their useful lives, helping to match the expense with the revenue they generate.
The ability to scale is critical for restaurant chains planning to expand.
Choose accounting software that manages increasing transaction volumes efficiently, supports new business models such as online ordering, and integrate new locations without disruption.
Software that is flexible meets your business’s requirements and goals and it grows and evolves.
Restaurant chains face the challenge of operating across multiple jurisdictions, each with its own set of regulatory standards and tax requirements.
Effective accounting software ensures compliance with these different regulations and maintains consistency in financial practices across all locations.
Financial reporting is at the heart of effective accounting software. Restaurant chains require detailed, accessible reports that provide deep insights into the overall financial health of the business.
Key reports include balance sheets, profit and loss statements, and cash flow statements. The software should allow for easy comparison of financial data over different periods and highlight trends that can guide strategic decisions.
The best accounting software seamlessly fits into your current tech stack. Integration with other restaurant software is key to enhancing operational efficiency, reducing manual errors, and streamlining processes.
Effective integration with inventory management systems and POS (Point of Sale) systems ensures that sales data, stock levels, and financial transactions are automatically updated and synchronized. This real-time data flow helps in maintaining accurate financial records, optimizing stock levels, and providing valuable insights for better decision-making.
MarketMan integrates with the top accounting software, enabling restaurateus to push payments without GL coding or manual entry, easily snap photos of their invoices, and access advanced reporting to track price changes, purchase patterns, and COGS. Book a demo today to learn how you can gain a personalized bookkeeper in your pocket to automate your accounts payable process.
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