Why Restaurants Need Specialized Accounting Expertise

Food is your passion; staying in business is your strategy.

With tight margins and complicated rules, restaurant accounting requires a whole different level of expertise. Is your accountant keeping up?

It’s More Than Just Numbers

Restaurants have a lot of moving parts– there are sales to track, inventory to manage, and specific tax rules to follow. And don’t forget the heavy integration of technology—everything from your point-of-sale (POS) systems to inventory software plays a crucial role in keeping your doors open and guests happy.

It’s not just about tracking expenses—it’s about knowing where your money is going and, more importantly, where it’s leaking. With a restaurant-specific accountant, you get someone who understands:

• The regulated tip reporting requirements that can easily trip you up if not handled correctly.
• How to manage food costs versus food revenue, so you can see what you’re really spending and where your profits are coming from.
• The 13-period accounting system that’s unique to restaurants and gives a better look at your financials than traditional monthly accounting.

Without this level of insight, you’re just guessing where your money is going.

Food Costs and Cash Flow Will Make or Break You

Let’s face it: cash flow is everything in a restaurant, and it’s not as simple as watching money come in and out.

From one day to the next, your sales could vary wildly based on factors like seasonality, weather, or even a slow week. A specialized accountant will:

• Help you track inventory leakage and spoilage, so you’re not losing money to wasted or misused products.
• Show you how to manage food costs versus food revenue in real-time, so you always have a clear picture of your profitability even with the unpredictable cash flow that comes with seasonality, slow weeks, and rainy days.

Additionally, they understand how to handle comps, discounts, and employee meals without losing track of what’s going in and out of the kitchen.

Menu Pricing Isn’t Just About What Tastes Good

You may have the best burger in town, but if your pricing is off, your profits will be too.

Many restaurant owners focus on providing great food and service—exactly what they should be doing. But without proper pricing and costing, even the best restaurants can lose money.

An accountant with experience in the restaurant industry will know how to help you plan for the ups and downs that come with the territory, such as:

Figure out which menu items are making you money (and which are costing you).
Close your books daily so you’re always aware of your over/under, and can adjust quickly if needed.
Save for those inevitable downturns in business. When things are good, are you setting enough aside to survive the bad weeks?

Vendor Relationships Are More Than Just Deliveries

Another area where restaurant-specific accountants stand out is their understanding of vendor relationships. Knowing your vendors isn’t just about getting the best produce—it’s about optimizing those relationships to get the best deals and maintain healthy cash flow.

Your accountant needs to know how to:

• How to negotiate payment terms with vendors to improve cash flow.
• What your options are for local versus national suppliers, including which tech solutions integrate best with your vendor processes (like MarginEdge, Restaurant365, or xtraCHEF and others).

A specialized accountant will also likely have connections within the restaurant industry, which means they can recommend the best vendors, systems, and payment terms to maximize your profitability.

Common Mistakes General Accountants Make

When restaurants come to us after working with a general accountant, there are a few things we see repeatedly:

• Missing out on the FICA tip credit. This is a huge tax break for restaurants, but many accountants who aren’t familiar with the industry miss it.
• Not reporting sales tax correctly for comped meals or employee meals. If you’re not paying attention to these, you could get hit with penalties down the line.
• Mishandling gift card liabilities and liquor tax. These require specific knowledge of the restaurant industry, and if they’re not done right, it can create issues later.

The bottom line? A general accountant may not have the experience needed to help you take advantage of all the tax breaks and credits available to restaurants.

Payroll and Labor Management

Labor costs are one of the biggest expenses for any restaurant, and if you’re not managing them properly, they can get out of control fast. A specialized accountant knows how to handle:

• Employees working across multiple locations: Aggregating employee hours across locations is key to preventing payroll errors and managing overtime correctly.
• Breaking down labor costs: Understanding the right balance of labor for front-of-house, back-of-house, and management is essential for running an efficient restaurant.
• Payroll system integration: Your payroll system needs to work seamlessly with your back-office operations to avoid mistakes and reduce labor costs.

Proper labor management goes beyond just cutting checks—it’s about having the right systems in place to track labor, reduce waste, and maximize your workforce’s efficiency.

Food and Labor Costs

At the end of the day, if you’re not managing your food and labor costs, you’re sinking. Restaurants live and die by these two numbers. Here’s where a specialized accountant comes in:

• Stay on top of inventory management and make sure you’re ordering smart, not running out to the store for last-minute, overpriced supplies.
• Optimize your staffing so you’re not overstaffed during slow shifts or understaffed during busy times.

Every penny matters in a restaurant, and your accountant should know how to pinpoint where you’re losing money and how to fix it.

Your Restaurant Deserves More Than Basic Bookkeeping

Restaurants don’t run like other businesses, and their accounting shouldn’t either. From managing cash flow and inventory to navigating tax credits and labor costs, every detail matters. The right accountant will help you maximize your profits, improve efficiency, and keep your restaurant running smoothly, even when times are tough.

Because You Have Enough on Your Plate—Let Us Handle the Numbers

Looking to get more out of your accountant? Our Advanced Package is built to give restaurants exactly what they need—better insights, smoother cash flow, and a lot less stress. It’s designed to help you run your business smarter, not harder. Learn why restaurants are seeing more value with our Advanced Package.