RESTAURANTACCOUNTINGMower & Associates, CPA
1833 S Millennium Way Suite 100Meridian, ID 83642
(208)[email protected]
Mower & Associates, CPA1833 S Millennium Way Suite 100
Meridian, ID 83642(208)342-5905
• Mower & Associates is focused on increasing restaurant profitability.
• M&A offers management solutions for single and multi-unit restaurants.
• M&A takes responsibility for payroll, accounts payable, financial reporting and tax preparation off your plate.
• Plus, you have electronic access to restaurant-specific spreadsheets and forms.
• We personally help you analyze your reports to find more profit.
• Give us your data from anywhere around the U.S. and we will help your restaurant prosper.
MORE CONTROLMORE PROFIT
CONTROLPOTENIAL PROFIT
IMPACT
Weekly P&L 2%
Purchasing and Receiving 1%
Costing the Menu 2%
Menu Engineering 1%
Perpetual Inventory Controls 1%
Scheduling and Motivation Techniques 2%
Bar Controls 1%
Reducing General Expenses 1%
Installing computerized POS System 3%
Employee Incentive Programs 1%
Fraud Detection 1%
Preliminary Profit Impact 16%
Less Additional Costs -2%
Net Profit Impact 14%
ATTENTION TO DETAIL
HIGHER PROFITS
In a restaurant grossing $2.5 million, if each server sold two more desserts per night, profit would improve 43%.
In a restaurant with $500,000 in sales, if every employee comes in ¼ hour later, savings would be $10,000 per year.
A steak house with a 4% profit, can double profit to 8%, with careful cutting of meat.
A pizza restaurant doing $3 million in sales, can save $80,000 by accurately weighting each cheese portion.
Mower & AssociatesRestaurant CPA
FINANCIAL STATEMENTS TOOLS for PROFIT
BALANCE SHEET
Summarizes Assets, Payables and Net Worth
Key accounts on balance sheet
Cash - must agree with bank balance
Inventory - must agree with physical inventory count
Payables - if there are no payables, the
balance sheet and P&L are wrong
STATEMENT OF PROFIT OR LOSS
This statement shows Sales, Expenses, and Profits
Use accrual accounting not cash accounting
Mower & AssociatesRestaurant CPA
QUALITY FINANCIAL STATEMENTS
• Who BEST prepares restaurant financial statements & tax returns?
• CPA firm specializing in restaurants • Bookkeeper• Any CPA Firm
Common Problems with Restaurant Statements• None Restaurant Chart of Accounts• Cash rather than accrual accounting• Unorganized detail • No interest on P&L, but loans on balance sheet• No physical inventory adjustments• Sales tax reporting errors
Mower & AssociatesPaul Mower
Restaurant CPA
Review of Profit and Loss Statements
WE ASK A LOT OF QUESTIONS ABOUT:
SALES
COST OF GOODS SOLD
LABOR
GENERAL EXPENSES
CASH FLOW
Restaurant Owner and Paul Mower, CPACompare and Measure Sales
Comparisons
This Week to Last Week
This Week to Same Week Last Year
Compare to other Restaurants
Sales per square foot
TrendsCustomer Count
Average Guest Check
Mower & Associates
BREAKEVEN SALES
Step 1 Add up Fixed Costs
Step 2 Add up Variable Costs
Step 3 Calculate Breakeven Sales
Mower & AssociatesBreakeven
ComputationBreakeven Sales
Fixed Costs 476,417 Subtract Var Cost % from 100%=CM%* 47.2%Breakeven 0.00Divide Fixed Costs by CM%Breakeven Sales 1,008,691
*CM% = Contribution Margin%
Sales needed for Target Profit
Fixed Costs 476,417 Subtract Var Cost % from 100%=CM% 47.2%Target Profit 50,000 Divide [Fixed Costs + Target Profit] by CM%Sales needed for Target Profit 1,114,553
COST OF GOODS SOLD
If Cost of Goods are high, check for:
Spoilage and Waste
Purchase and Receiving Shortages
Employee Theft
Under reported Sales
Calculate exact foods costs each period (weekly)
Food cost occurs when the food is used, not when the food bill is paid
Step 1 Count merchandise received during the period
Step 2 Count inventory
Step 3 If inventory increases, subtract the increase from purchases
If inventory decreases, add the decrease to purchases
Example
Purchases $4,000
Inventory Decrease 500
COGS $4,500
Restaurant Owner and Paul Mower, CPAReview Labor Costs
Factors that Affect Labor Costs• Sales
• Type of Restaurant
• Capability of employees
Analyzing Costs
• Compare labor costs to other restaurants
• Review labor on a daily basis
• Set goals for labor costs
• Labor Schedule based on Hourly Customer Count
Mower & Associates
DAILY LABOR SCHEDULE
HOURSCustomer
Count
MGR
CHEF
COOK
PANTRY
HOSTESS
WASHER
SERVER
SERVER
SERVER
BUS
BAR
BAR
BAR SERVER
9:00
10:00 1
11:00 6
12:00 23
1:00 5
2:00
3:00
4:00 3
5:00 12
6:00 30
7:00 8
8:00 3
9:00 1
10:00 1
11:00
Count 93
Hours 114 9 9 811 9 12
11 9 5 9 8 8 6
GENERAL EXPENSES CONTROL
EXPENSE
STANDARD PERCENTAGE OF SALES
Laundry and Linen 1.3%Equipment replacement 1.6%Supplies 1.7%Advertising Full Service 2.1% Fast Food 4.1%
Utilities 2.6%Office 0.5%Telephone 0.5%Insurance 2.2%Credit Card Discount AMEX 2.9% VISA 1.9%
Repairs 1.8%Interest 9.0%Rent Full Service 5.5% Fast Food 6.1%
THE MENU
Menu Costing
Menu Pricing
Menu Engineering
MENU COSTING
Steak Dinner
Item Ingredient UnitUnit
PricePortion
Cost per Portion
Steak Ounce 0.96 10 oz $ 9.60
Vegetable Lbs. 0.96 3 oz $ 0.18
Baked Potato Each 0.12 1 $ 0.12
Sour Cream Quart 1.25 4 oz $ 0.16
Butter Pound 1.61 2 oz $ 0.20
PLATE COST $ 10.26
MENU PRICING
Three ways to price a menu• Compare to competitors• Food cost percentage for target profit• Add profit, overhead and food cost for each
item
MENU ENGINEERING
• Rate each menu item• A Popular and Profitable• B Popular Only• C Profitable Only• D Unpopular and Unprofitable
• Based on Rating
• Eliminate items• Change the price of items• Refocus the menu placement• Change the way the items are prepared• Add new items to revitalize the menu
Mower & Associates Menu Engineering
Menu Engineering
Description
% Total
Total Menu Items Sold
Food Cost
Selling Price Per
Menu
Gross Profit Per Item
Total Food Cost
Total Menu Sales
Gross Profit $
Food Cost %
Popular Rating
Profit Rating
Overall Rating
Column A B C D E F G H
(C-B) (A x B) (A x C) (F-E) (E / F)
New York Steak 17% 200 7 17 10 1,400 3,400 2,000 41% A A A
Fajita 19% 185 3 10 7 555 1,850 1,295 30% A A A
Seafood fettuccini 10% 95 5 15 10 475 1,425 950 33% A B B+Sirloin 9% 85 4 13 9 340 1,105 765 31% B B B
Roasted chicken 7% 65 3 13 10 195 845 650 23% B B C+
Eggplant 7% 70 4 12 8 280 840 560 33% B B B
Shrimp 7% 65 5 13 8 325 845 520 38% C C C
Salmon 5% 45 5 16 11 225 720 495 31% C C C
Fish & Chips 7% 68 2 9 7 136 612 476 22% C C C+
Radiatore Pasta 8% 78 3 9 6 234 702 468 33% C C C+
Snow Crab 3% 25 5 13 8 125 325 200 38% D D D
Seared Venison 1% 7 12 22 10 84 154 70 55% D D D
Hamburger 2% 20 1 3 2 20 60 40 33% D D D
Total 100% 1008 4394 12883 8489 34%
Average 78 653
Value for your $
Mower & Associates, CPA1833 S Millennium Way Suite 100
Meridian, ID [email protected]
(208)342-5905Paul Mower
Restaurant CPA