From Bagels to Bordeaux: What I’ve Learned About Restaurant Bookkeeping
Before I started the Fluffy Hammer Bookkeeping journey, I was behind the numbers for some very familiar names: Applebee’s, TGI Fridays, and later on Trufoods, a multi-franchise operator. I’ve also been in the trenches setting up bagel shops and sandwich shops from scratch and even managing the financial side of a few high-end restaurants—including Michelin-star kitchens where the margins are razor thin, but the expectations are sky-high.
In other words: I’ve seen it all, from chain-restaurant chaos to white-tablecloth precision. And here’s the truth—whether you’re slinging pancakes or pouring a $400 bottle of wine, the fundamentals of restaurant bookkeeping are non-negotiable.
Here are my go-to tips, inspired by SLC Bookkeeping’s five-step guide, FitSmallBusiness insights, and a whole lot of lessons I’ve learned the hard way:
1. Build a Chart of Accounts That Works Like a Recipe Card
Restaurants aren’t “just another business.” You’ve got food costs, liquor, labor, kitchen supplies, delivery fees, marketing spends, and more. Build a chart of accounts that spells it all out clearly—front of house vs. back of house labor, food vs. beverage, dine-in vs. delivery. If you wouldn’t toss all your ingredients in one unlabeled bin, don’t do it with your books.
2. Reconcile Daily Sales is as important as a Closing Checklist
Your POS is the equivalent of your line cooks—you rely on it, but you still have to double-check it. Match daily sales against deposits every single day. No exceptions. Skipping reconciliation is like leaving food out overnight: sooner or later, it’s going to stink.
3. Track COGS and Inventory Monthly
Cost of goods sold is the heart of your profitability. Regular inventory counts—weekly for perishables, monthly for bar stock—help keep theft, waste, and over-ordering in check. Don’t “eyeball” it; measure it. A missing case of avocados may not feel like much until you realize it adds up to thousands over the year.
4. Keep Payroll Tight and Transparent
Restaurants run on people, but payroll is usually your biggest expense. Run payroll on time, track overtime carefully, and know your labor percentage compared to sales. A packed dining room feels great, but if you’ve got six servers on when you only needed four, your profit margin just took a nosedive. There are many options for payroll providers, but using one that is Restaurant focused is important.
5. Separate Business & Personal Finances
This one’s simple but critical: keep your restaurant’s bank account separate from your personal one. No “just putting the groceries on the company card” or pulling out cash for your kid’s soccer gear. It muddies your books, and trust me, the IRS does not have a sense of humor. Nothing wastes an owner, manager or bookkeepers time like chasing receipts and reallocating non-business costs.
6. Use Restaurant-Friendly Accounting Software
QuickBooks, Xero, or restaurant-specific platforms like Restaurant365 can be lifesavers. They integrate with POS systems, payroll, and even vendor invoices. The days of managing your restaurant finances with Excel alone are over. That’s like trying to run a Saturday night rush without prep—painful and unnecessary.
7. Budget for the Slow Season (and Emergencies)!!!
Every restaurant has its ebbs and flows. If you don’t plan for the January slump or unexpected equipment repairs, you’re setting yourself up for panic. Build a reserve fund the same way you prep a backup mise en place—you may not need it every shift, but when you do, it’s a lifesaver. If you have a checking account, tax and savings account, you should also have an untouchable emergency fund.
8. Review Financial Reports Weekly and Monthly
Sit down monthly—at minimum—with your P&L, balance sheet, and cash flow statement. Don’t just skim; study them. Spot trends, highlight red flags, and celebrate what’s working. Just like you’d taste-test dishes before service, test your numbers before they go stale. Remember a weekending payroll and month-end inventory adjustments can effect the numbers as you understand them, so review with your bookkeeper how these scheduled events effect your bottom line. And if COGS aren’t in the 30% range, its time to review reports past the P&L…dive into the general ledger.
9. Stay Tax-Ready All Year
Between payroll taxes, sales taxes, and tip reporting, restaurants face a unique tax maze. Stay compliant year-round—don’t wait until April to panic. Set aside money for taxes like you’d reserve tables for VIPs. Because when the taxman shows up, he’s not asking for reservations. Having current and accurate books makes a big difference.
10. Don’t Be Afraid to Ask for Help
Bookkeeping isn’t everyone’s jam, and that’s okay. If you’re better at running the floor than running the numbers, outsource. A strong bookkeeper or accountant is like a sous chef—they keep things running smoothly so you can focus on what you do best.
The Bottom Line
Restaurant bookkeeping isn’t glamorous (no one’s Instagramming their reconciled bank statements). But if you want your concept to thrive—whether it’s a local bagel shop or a Michelin-star dining room—it pays to get the numbers right.
At Fluffy Hammer Bookkeeping, I bring my years of restaurant experience (and a few battle scars) to help owners like you build stronger, cleaner books. Because a restaurant with messy financials is like a kitchen with a broken walk-in: it won’t last long.