Your restaurant has the best food and people love it. But why do you have to add more fund into the restaurant every month? Where did the money go?
This situation happens very often in the restaurant business. Restaurant owners are left confused and frustated because they don’t see the profits. In fact they have to top up with fresh funds every few months.
There are several common reasons why this happens:
- There is no proper accounting or bookkeeping
- There are thefts and frauds that the owners are unaware of
- Wrong calculations of food and beverage costs
1. Restaurant accounting is one of the most important aspects of running a restaurant. A lot of owners neglect this because it can be overwhelming for them. Most owners focus on producing the best food and generating sales but they do not keep proper accounting practices.
If the restaurant owner doesn’t understand accounting, he/she should hire a proper accountant who understands the restaurant business. Proper accounting records is more than just keeping the receipts and invoices. Keeping receipts and invoices will not give the accurate information on whether or not the restaurant is profitable. There are more steps and processes that need to be done to know the profitability of the restaurant.
For non-accountant, I provide some simple bookkeeping tips in my ebook “How To Open Your Restaurant in Malaysia in 8 Weeks” (page 70).
Always keep track of your revenue and expenses by creating MONTHLY Profit & Loss report. The P&L report is the most important tool to understand your business performance.
2. Like most retail businesses, thefts and frauds are very common in restaurant businesses. Most restaurant owners only safeguard the cash sales, thinking that’s the only way employees steal from them.
There are a lot of ways people can steal from the restaurants. From faking the receipts to creating phantom employees to swindling ingredients for personal use. I write extensively about restaurant thefts and frauds in my other ebook “Restaurant Undercover : Proven Strategies to Combat 24 Frauds & Thefts in Restaurant Business”
3. A lot of restaurant owners enter the industry without knowing how to calculate the food and beverage costs. They think they make profits when they price the products 100% increase from the cost. Every industry has its own standard on how to set the prices of goods, including restaurant business. Make sure you know the industry standard of Cost of Goods Sold (CoGS) for restaurant business.
I provide simple calculations on how to set the correct prices for the food and beverages in my ebook “How To Open Your Restaurant in Malaysia in 8 Weeks” (page 28). This calculation is simple enough even for those who hate numbers. Correct pricing is crucial for a profitable restaurant so master the food cost calculation before opening any restaurant in Malaysia.
With these restaurant accounting tips, you can be more confident in running your restaurant operation.
