Operating a restaurant is challenging, with the industry reporting one of the highest failure rates. Even in the best of times, restaurants experience high turnover rates, notoriously low margins, and strict operational regulations. Over the past few years, restaurant failure rates shot up due to the pandemic, and restaurantaurs continue to face challenges even with government assistance.
Below are some of the top accounting challenges restaurant owners face and solutions to overcome the issues at hand. You’ll notice that they all come back to a core problem: too many separate systems and not enough automation. If you are experiencing any of these pain points, it may be time to explore cloud-accounting technology for your restaurant.
Restaurant Accounting Challenge #1: You’re pulling data from spreadsheets to build reports and budgets
If you’re stuck in Excel, making the shift into the digital world can resolve many of your pain points. Pulling data from spreadsheets to build reports, review, and create budgets can be a headache, filled with human error, and often takes so long that the data is out of date by the time you’re done. If the data used to create reports and budgets are either filled with mistakes or not up-to-date, you could be leading your business down the wrong path.
Adopting cloud-based accounting apps means gathering all of your information into one central hub. Cloud-accounting apps, such as Xero, provide automated solutions, meaning your financials are up-to-date at all times and viewable from any supported device. Whether you’re working from the restaurant, at a different location, or meeting with vendors, you have real-time insights into your business finances. With this real-time data, business owners feel more confident making business decisions, creating budgets, and reviewing reports.
Restaurant Accounting Challenge #2: Entering transactions, expenses, and bills eats up all of your time
Manual entries can be the demise of any business, especially in the restaurant industry. Restaurants have a high volume of transactions with supply orders, customer tickets, and staff payouts. Entering these transactions can be a huge time suck if you’re doing manually, leaving little time to focus on business sustainability and growth.
Our team has worked with multiple restaurants and breweries to establish cloud accounting solutions. When we implement cloud accounting tools, the typical pain points they’re relieved to resolve are payroll, expense management, and bills. By automating these tasks and eliminating double data entries, the owners gain more than time back—they can view their real-time financial insights.
Restaurant Accounting Challenge #3: Payroll and staff management looks like your kitchen after a busy service
If your payroll management is as messy as your kitchen after a busy dinner service, you might need a deep cleaning of your payroll processes. The restaurant industry experiences one of the highest rates of staff turnover, making it a nightmare to keep up with onboarding, taxes, tips, and paychecks.
A cloud payroll app offers automated solutions to the payroll process, including onboarding, timekeeping, payroll taxes, tip-outs, and paychecks. By choosing an app that integrates with your point-of-sale system and central accounting hub, you can ensure all data aligns and eliminates the need to spend hours manually entering numbers.
Restaurant Accounting Challenge #4: Accounting for multiple locations has you spread thin
As your restaurant sees success, you may begin expanding your business to multiple locations. First off, congratulations on the success of your first location! Second, it might sound daunting to account for not one, but two restaurants, especially if you’re already feeling a bit over your head.
Our first recommendation is to migrate to the cloud. Our team of experienced cloud accountants can work with you to understand your needs and areas of opportunity to develop a network of cloud-accounting apps for your business and properly utilize the features. It is crucial to understand that although you may see the different restaurant locations as one business, they are individual businesses and must be accounted for as such. The good news is that as you expand your business, each location can be added to your cloud accounting app to adopt the same processes, maintaining efficiency and consistency across the brand. Each location will have its own accounts, and be accounted for separately, but can be viewed and compared in one hub, which streamlines reporting and business decisions.
Restaurant Accounting Challenge #5: Your expertise is in the kitchen, not the back office
If you’re the head chef, chances are your expertise is in the kitchen, not the back office. Your restaurant will see success based on the food and drinks you serve and the service you offer, but your continued success depends on the processes in your back office. Without the right tools and knowledge, the back office will crumble, leaving your restaurant hanging on by a thread with declining cash flow.
Enlisting the help of an experienced financial expert can help to establish processes, protocols, and tools that will aid in the success of your restaurant. Establishing budgets is another key component to the success of a restaurant. You don’t need to do it all on your own. Send our team a message. Let’s reduce your current struggles, identify areas of opportunity, and find solutions to your biggest pain points.