RESTAURANTACCOUNTINGMower & Associates, CPA

1833 S Millennium Way Suite 100Meridian, ID 83642

(208)342-5905paul@mowercpa.com

Mower & Associates, CPA1833 S Millennium Way Suite 100

Meridian, ID 83642(208)342-5905

paul@mowercpa.com

• 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 83642paul@mowercpa.com

(208)342-5905Paul Mower

Restaurant CPA