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Restaurant bill book format for Public Relations

today I'm going to give you a crash course on restaurant accounting what it's all about what you need to do to have some success with it because the truth is it's overwhelming all right and what prompted this video in the first place is last week I was at a bar helping someone I know his name's Phil and I was helping him get his bar systemized and I was helping him fix a lot of the problem areas he was having and like many bar and restaurant managers he did not go to school on how to run a business he just sort of rose up through the ranks from server to bartender to head bartender to bar manager to GM and so on and so forth and he had all this responsibility just dumped on him and so when we got to the part about financials and what they do or what they were failing to do as it turned out in order to track their revenue and expenses and basically determine the financial health of the business he started to freak out all right became unglued and I thought he was going to short circuit on me so I slapped him in the face like you would a cartoon character and I was like pull yourself together man all right I didn't do that but I did calm him down I told him everything's gonna be okay and I gave him the basics of accounting and what he needed to do in order to get his finances in order because that simply wasn't his strong suit and in the end we actually had him hire an online bookkeeping service to help him do it all which is well worth the money believe me I do the same thing for my business all right but the point to all this is I know after helping them that there are a lot of fills out there who need help in this area so I'm going to give you a crash course in restaurant accounting so you have a basic understanding okay so enough blabber then let's let's talk about accounting and let's try not to Bubble over with excitement all right uh again it's the basics of accounting to make sure you're doing something to track our financials so if you're an accountant an actual accountant and you're watching this don't jump in the comments the comments and start criticizing and be like you didn't cover the acid test ratios and the inverse consequences of anti-dilution or whatever all right leave us alone go Mark something down in a ledger okay so let's jump in and start learning all right first off I don't want to insult your intelligence but for some of this I'm going to assume that you're a child and you want to know everything okay so let's start with what is restaurant accounting all right I told you we're starting basic well restaurant accounting is the process of recording classifying and summarizing all Financial transactions of a restaurant okay and that means that you're going to be tracking things like Revenue expenses assets liabilities and equity and this is going to provide a clear picture of your restaurant's financial performance which means you can then improve those areas that are losing you money so you can make more bling bling as I say old school okay well how does accounting actually help you well effective accounting is going to help restaurant owners and managers like you make informed decisions it's going to help you maximize profits avoid Financial pitfalls and stay in compliance with financial regulations okay so accounting actually helps you do things like control expenses or establish menu pricing staff ingly control cash flow improve tax reporting and create growth all things that you can get from your financial reports okay and then we briefly touched on this but you know should you do the accounting yourself or hire someone well if you're good with numbers and you're a quick learner and you have large chunks of time to track it all then you know by all means go for it okay the problem is since you're watching this video I'm going to assume you're not an accounting expert so in my opinion uh you either need to have someone else do it um you know if you have like a manager or uh who's great at this stuff and that's great all right otherwise I would hire an accounting service it's going to pay for yourself you know I'm gonna have more on good accounting book booking bookkeeping services coming up easy for me to say all right next up uh what are the types of restaurant accounting all right well we have financial and this deals with the preparation of financial statements such as income statements also known as The Profit loss uh balance sheets and so on and so forth which provide a snapshot of the restaurant's Financial Health uh we have the cost accounting this focuses on the cost of goods sold and helps restaurant owners understand how much it costs to produce each menu item and then finally we have managerial which involves the use of financial data to make informed decisions about the restaurant's operations like we just talked about and so then I have owners and managers ask me they're like Dave they say because that's my name they're like Dave what is the difference exactly between bookkeeping and accounting well bookkeeping is the process of recording Financial transactions as they occur on a daily weekly monthly basis accounting on the other hand is the process of summarizing interpreting and analyzing the data in order to make Intelligent Decisions that improve your restaurant's bottom line all right but really the two go hand in hand like Hansel and Gretel okay you need both to make a great story all right next we have the accounting methods specifically accrual accounting and cash accounting which you might already know about but the main difference between accrual accounting and cash accounting is the timing of it all okay when the revenue and the expenses are recognized okay cash accounting recognizes revenue and expenses only when the money changes hands while accrual accounting recognizes Revenue expenses when they are incurred or the date on the bill or the invoice regardless of when the money is exchanged okay well which one should you use well if you want me to just give you an answer so you don't have to decide I would say to use cash accounting if you're a smaller business uh and I'm going to tell you that because quite frankly it's just plain simple it's a lot simpler than the accrual method all right with that said if you want an accurate Financial picture of how your business is doing each and every month accrual accounting is going to be the way to go because it's going to show you exactly what happened each month as far as your expenses and your income go for example all right let's say that you rent your place out for like two thousand dollars a night and let's say someone books it on September 13th so you create an invoice but because they are irresponsible and they're inconsiderate they don't actually pay pay you until say October 4th right that's when you actually get the money well really you earn the money in September so it should be recorded as such but with the cash accounting you record it when the payment comes in which is October so now income that was earned from the business that came into September is now showing as income uh earned during the month of October okay do you see how the issue of accuracy comes into play here okay so then you're like well then why not just do accrual accounting well because accrual accounting is more complicated with a lot of extra paperwork and you have to keep track a separate track of your cash flow this way uh so if you're already overwhelmed in your restaurant and you don't want to be more overwhelmed I suggest you do cash accounting because your income and expenses should only overlap by a few weeks and so your overall view of your income and expenses will still be relatively relatively accurate okay does that make sense all right so next let's get into uh common accounting terminology which you should not only know what they are by definition but you should know how to use and understand each one to your advantage okay I'm just going to read them off really quickly uh cogs which I'm sure you heard of this is cost of goods sold or the cost of producing each menu item accounts receivable this is money owed to the restaurant by customers who have not yet paid their bills like the person who rented out your place like I just talked about if it's not coming in that goes under accounts receivable accounts payable this is money owed by the restaurant to vendors and suppliers and I'm sure that happens to you sometimes if you're behind on payments and you have to pay your beer vendors Prime cost this is the cost of your cogs and your labor combined and Prime cost is a very important metric to track I'm going to talk more about that in a little bit your profit loss statement this is a financial statement that shows the restaurant's Revenue expenses and net income over a specific period of time in my opinion The Profit loss statement is the most important document that you can have on your reporting and your accounting your balance sheet this is a financial statement that shows the restaurants assets liabilities and Equity uh and your cash flow statement which is a financial statement that shows how cash is moved in and out of the business During the period covered by the statement and then finally we have the chart of accounts uh which is a list that defines the area where the money Flows In and Out of the restaurant okay so let's go over these um a little more specifically okay what are cogs exactly uh well cogs are the cost of goods sold includes the cost of all the ingredients that go into each dish or drink okay it also includes the cost of any packaging materials such as containers or napkins as well as other supplies used in the kitchens and cogs can be calculated by taking the beginning inventory adding purchases and subtracting the ending inventory for any given period and then of course the resulting figure is the total cost of goods sold for that period okay and it's essential that you keep track of the cogs because it's going to directly affect your profitability okay and to keep your cogs under control you of course need to keep an eye on your inventory levels and by tracking your cogs and taking steps to control it all right you're going to ensure that you're using high quality ingredients you're pricing your dishes appropriately and you're maximizing profits okay let me give you a quick example here all right if we look at a quick example um of the math formula I just talked about let's say you take your bikini inventory on June 1st and you have 12 743 in sitting inventory that's wholesale value okay that's what you pay for it uh and let's say that your June purchases are eleven thousand five hundred dollars and then you count again at the end of the month and it's 12 158. so if we put that all together we take the beginning we add purchases we subtract the ending you're gonna get twelve thousand eighty five dollars that is your June cogs does that make sense we got it okay well let's talk about Prime cost what is Prime cost exactly well Prime cost in a restaurant refers to the total cost of goods sold your cogs and your total labor costs okay it's the sum of all the direct costs and expenses attributed to the creation of menu items including cost of ingredients the packaging uh direct labor cost like salaries and wages and payroll taxes you know Prime cost is a critical metric for restaurants because it's it represents like this larger expense for almost all the restaurants and it's directly related to the profitability of the restaurant and by controlling the Prime cost you're going to be able to increase your bottom line and put money back into your bank account okay and in general your Prime cost should be about 55 to 65 percent depending on what type of restaurant you have you might be fast casual you might be fine dining but that should be the range so that's like two-thirds of your costs from cogs and labor all right so if you did like one million dollars in sales your cogs and labors would be around six hundred thousand dollars that is crazy right okay in just a minute I'm going to show you the profit loss statement I developed which many owners and managers use and you'll see that has Prime costs built right in all right and then let's talk about chart of accounts what is a chart of accounts okay and a lot of people don't have a chart of accounts or if they have a chart of accounts they have a very limited chart of accounts they're listing like five things on there which you can't have okay and as I mentioned earlier checkup accounts is a list that outlines the inflow and outflow of money and includes categories like you know assets liabilities uh Revenue expenses and Equity uh which are organized under the balance sheet accounts uh assets liabilities and owners equity and income statement accounts like your operating revenues your operating expenses non-operating revenues gains uh non-operating revenues and expenses that's a lot okay and to make a chart of accounts more manageable um I suppose to see exactly where your money's flowing it's advisable to break these elements into subcategories such as marketing budget cost of goods sold total sales figures and inventory the number of items on a chart of accounts list can be in the dozens in order to categorize everything properly as you can see right here I'm just kind of scrolling through a sample owner here this is why you really might need help with this I highly recommend doing this but let me give you an example excuse me my my voice is going let me give you an example of the value of getting detailed on categorizing and this refers to your Cog specifically not all of your chart of accounts not on sorry this is not specifically just your chart of accounts this is one area of it but I want to show you the value of it so uh when we're talking about bark Hogs instead of just listing bar and grouping all of your cogs and sales in one bar category you're going to want to break it up into subcategories so you can get more information especially since different types of alcohol pour a different poor cost percentages based on industry standards all right so instead of just having bar you want to list things out such as bottle beer draft beer your liquor uh your wine and your non-alcoholic Beverages and you'll see in a minute that when I pull up the profit loss statement template that we have um but the more detailed your chart of accounts is the more information you'll have because if you just have bar and your cost percentage is 22 you have no idea which categories are meeting industry standards and which ones are not okay because in general bottle beer and draft beer for right around 25 percent liquor should be in the 16 to 19 range wine can be anywhere from 20 to 35 percent depending on the wine sometimes even more and non-alcoholic beverages are like 10 to 15 so you want to break it down because if you have high cost percentage in your bar and you're pouring a lot of wine you'll be able to see why it'll make sense all right but if you have high cost percentage and you don't pour much wine you might see that your liquor cost is around 26 percent which means your liquor needs to fix them alright does that make sense and if you have good accounting or bookkeeping service they can help be with your chart of accounts as well all right moving right along um let's talk about what Financial templates you should use all right well I'm not gonna go I'm going to list um what I think is important but it's not every single financial report you can use in the world I have four that I use all right you definitely need the basics uh if you're going to run the business like a grown-up all right so you need to have some sort of daily cash uh reconciliation to start with or report to record your sales track your your discounts your comps etc etc all right you can see the one we use here that's included in my restaurant management masterclass this is basic bookkeeping but you should be able to get all this information from your POS system okay and then next we uh is our profit loss statement I'll call also called an income statement and to me this is the most important financial statement you will use as I mentioned before it's going to track all of your sales and all of your expenses and by using the statement you can determine the cost percentages in each category to determine if you're on track or not okay your profit loss statement can also be compared to your budget projections to see if uh if you're where you're supposed to be okay and as promised uh this is a glimpse of the profit loss statement you can find in my restaurant management masterclass it's not as extensive as some P L's but it is an extremely useful and valuable tool and as you can see we have all the categories broken down over here and if you take a look you'll notice that the cogs and the sales categories match so you can determine your cost percentage for each category as they relate directly to each other you need to set it up like this okay this template is also a 12-month template so you can view your current month or choose any month to see your year-to-date numbers which gives you an overall average of how you're doing for the year okay and as I mentioned we have the Prime cost calculation listed right here along with the industry averages of each category for you to reference okay now you don't need to use mine but you or your accounting service should have something like this next up is the cash flow statement so you can see exactly where your money's coming and going all right we use a weekly cash flow statement in the master class which you can see here but by analyzing the cash flow statement you're able to identify areas where you can improve cash flow such as reducing expenses or increasing Revenue okay you can also use a statement to forecast future cash flows and plan ingly all right and then finally we have the balance sheet which provides a snapshot of your financial position at any specific point in time all right this includes three main categories uh assets liabilities and Equity uh basically on the left side of the balance sheet you have assets which you own okay as a restaurant owner uh and on the right side you have liabilities and equity which is what you owe all right at any game at excuse me at any given time and all times both the left side and the right side must be equal which is why the balance sheet equation is assets equals liabilities plus Equity okay the balance sheet can get complicated which is why I use an accounting service for this because accounting is hard as we've learned okay in general assets represent everything that the restaurant owns and has control over things like cash inventory equipment property liabilities represent everything that the restaurant owes to others such as loans accounts payable and taxes owed okay Equity represents the residual interest and the assets of the restaurant after deducting liabilities okay it includes the owner's equity which is the total amount of money invested in the restaurant by the owner okay as well as retained earnings retained earnings is the portion of the restaurant's profits that haven't been I'm sorry yes that have not been distributed to the owners as dividends okay and that's all I've got to say about that that gets complicated that's a definition of everything to give you an overview and again even when I say it it's still confusing I get it so you know that's that's why I always hire Accounting Service to to get it all done now there are other financial reporting tools and templates you can use besides just these four okay like we use a weekly Prime cost report which gets into more detail about the Prime cost kind of shows you what's going on you can also use a budgeting template which is smart that this is like a financial plan that outlines the expected income and expenses for a specific period okay and when you're creating a restaurant budget you need to consider things like fixed and variable costs all right fixed costs include things like rent utilities Insurance your available costs are include food labor supplies again you should also consider your expected revenue and profit margins when creating a budget okay but for accounting purposes the basic four reports I listed are a necessity to run in a smart business so make sure you know you have those locked down okay hang with me just a little bit longer okay we're almost to the end all right so with all this complexity going on with your finances you know we need to ask what are the tools you need to succeed you know what's going to make your life easier and your numbers the most accurate they can be all right let's go over them first off is your POS system okay you need a great POS system for many reasons all right counting just being one of them I'm not going to get into all the reasons you need a great POI system we don't have time but your PR system should be able to spit out all of the financial data when it comes to sales and transactions with most of them you can integrate with some sort of accounting software like QuickBooks or something okay and then we have inventory management software which of course is what we do here at bar Patrol uh we're all about inventory management an inventory app and software to track your inventory and do your order and invoicing so you can see exactly what's going on with your inventory at all times accounting um software like I just mentioned like QuickBooks being the most popular have an accounting software is key to making your life easier for accuracy and when it comes to your accounting numbers okay obviously and then we talked about accounting services which we're also going to talk about next in more detail I highly recommend I've said this over and over again I highly recommend accounting services all right as the saying goes know your strengths Outsource your weaknesses all right there's no need to you know go ball pulling your hair out all right hire an accounting service to do it all for you and I know you're probably worried about the expense of it all but they will actually help you at least make your money back if not more and you're going to save your time and your sanity all right and then finally we have Payroll Services this is another area that can easily be outsourced because it is extremely time consuming okay and then finally you know let's talk about the best accounting services and bookkeeping services out there and if you want to go that route you know which one should you choose all right well after much research that I've done these are the best ones that I've found all right uh bookkeeper360.com zendu and I'm kind of putting these in order that I like them but any any one of them will be good bench is good 1-800 accountant and then there's there's actually a QuickBooks live which which is an additional cost of just having QuickBooks um that one's kind of my least favorite but it's still good if you're a big QuickBooks fan okay so I have those links in the description and a couple of them have real Barman deals attached to them so you get like 20 or 30 off your first three months so if you're gonna go this route use the links save yourself some money okay I've listed which ones have the deals in the description But ultimately the decision to hire a bookkeeping service depends on your individual needs and your circumstances if you feel that you're spending too much time trying to manage your finances by yourself or you're not confident in your ability to manage your books which is most of us all right hiring a bookkeeping service is the way to go and it's what I would suggest okay however if you have experience in accounting and you prefer to save money despite the time you're gonna have to spend on it then that's the way you should go okay so here's what's what all right as previously stated this was a crash course to give you an understanding of restaurant accounting and what you need to do in order to get things in order okay it is by no means an exhaustive tutorial on accounting if you really want to become an expert you know you're you'll need to go you know take a class yourself to do that all right personally I'm into Outsourcing but it can certainly be valuable to know what's going on yourself okay sort of like when you bring your car into the mechanic it's nice to know a little bit about cars so they don't screw you over all right they're like the manifolds cracked so you're gonna have to replace that and you've got some carburetor combustion going on and I don't know I don't know how I'm talking about uh I'd be like I thought the manifold was like a sandwich you know like a manwich all right so hopefully my mechanic's not watching this video he's gonna take advantage of me okay anywho thanks for being here I hope this helps you you know get you going in the right direction when it comes to your bookkeeping and your accounting I want to thank you for hanging out with me today I'm going to see you next time I'm out