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Table of Contents

INTRODUCTION

Overview of Restaurant and Franchise Accounting

Restaurant and franchise accounting is a specialized area of finance that focuses on the tracking, managing, and analyzing of a restaurant’s financial operations. This discipline encompasses a wide range of financial activities, from daily sales and cash flow management to payroll, inventory control, and compliance with tax regulations. The primary goal of restaurant accounting is to provide restaurant owners and managers with a clear understanding of their financial position, enabling informed decision-making that supports profitability and sustainability.

The importance of restaurant and franchise accounting cannot be overstated. In an industry known for tight margins and high competition, effective financial management can be the difference between success and failure. Accurate accounting helps restaurant owners identify profitable menu items, make strategic staffing decisions, control costs, optimize pricing strategies, and improve overall operational efficiency. Additionally, it ensures compliance with tax laws and financial regulations, reducing the risk of legal issues and penalties.

Key Objectives

  • Educate – restaurant owners, managers, and aspiring entrepreneurs about the fundamentals of restaurant accounting, including essential practices and principles.
  • Provide Insight -into effective financial management strategies tailored to the unique needs of the restaurant industry.
  • Offer Guidance – on implementing accounting software and leveraging technology to streamline financial operations.
  • Highlight – the importance of compliance with tax laws and other financial regulations specific to the restaurant sector.
  • Equip – readers with the knowledge and tools necessary to make informed financial decisions that enhance their restaurant’s profitability and growth potential.

Main Sections

  • Basics of Restaurant and Franchise Accounting – This section lays the foundation, introducing key accounting principles and explaining how they apply to the restaurant and franchise industries.
  • Managing Restaurant Finances – Here, we delve into budgeting, cost control, and pricing strategies that are essential for financial health.
  • Restaurant Accounting Practices – This part covers daily operational finance tasks, including sales tracking, cash flow management, and payroll.
  • Taxation and Compliance – A crucial section that outlines the tax obligations of restaurants and strategies for ensuring compliance.
  • Implementing Accounting Software and Technology – This section explores how technology can be used to improve financial management in restaurants.
  • Advanced Topics in Restaurant Accounting – For those looking to deepen their understanding, this part covers financial analysis, performance metrics, and strategic planning.
  • Resources and Tools – Finally, we provide a curated list of tools, software recommendations, and educational resources to support restaurant owners and managers in their accounting efforts.

BASICS OF RESTAURANT AND FRANCHISE ACCOUNTING

Restaurant accounting is a branch of accounting that focuses specifically on managing the financial records, transactions, and operations of restaurants. This includes the recording of income and expenses, tracking of inventory, payroll processing, and compliance with tax obligations. The goal of restaurant accounting is to provide a clear financial picture of the restaurant’s operations, helping owners and managers make informed decisions to drive profitability and growth.

Key Accounting Principles

Accrual vs. Cash Accounting

  • Accrual Accounting – This involves recording revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. This method provides a more accurate financial picture, especially in terms of profitability and financial health, but can be more complex to manage.
  • Cash Accounting – Involves recording transactions only when cash is received or paid. This method is simpler and may be preferable for smaller restaurants or those with simpler operations, but it may not provide as accurate a view of the restaurant’s financial status over time.

Importance of Consistency in Accounting Practices

Consistency in accounting practices is crucial for accurate tracking, comparison, and analysis of financial data over time. This includes consistent application of accounting methods (accrual or cash), inventory valuation methods, and categorization of expenses and income. Consistent practices ensure that financial statements are reliable, making it easier to identify trends, make comparisons, and make informed business decisions.

Understanding Financial Statements

Profit and Loss Statement (Income Statement)

The profit and loss statement, or income statement, provides a summary of the restaurant’s revenues, costs, and expenses over a specific period, showing the net profit or loss as a result. This statement is essential for understanding the restaurant’s operational efficiency, profitability, and areas where cost control or revenue enhancement is needed.

Franchise Accounting

Franchise accounting involves tracking revenues, expenses, and profitability for each franchise location as well as the franchisor; proper accounting principles and standards must be followed to accurately report financial performance. Franchisors and franchisees should work with accounting professionals to implement effective accounting systems and controls.

Balance Sheet

The balance sheet provides a snapshot of the restaurant’s financial condition at a specific point in time, listing assets, liabilities, and equity. Assets include cash, inventory, and equipment, while liabilities cover debts and obligations. Equity represents the owner’s interest in the business. The balance sheet is crucial for assessing the restaurant’s liquidity, solvency, and overall financial health.

Understanding these basics of restaurant accounting is essential for effective financial management and strategic planning in the restaurant industry. These principles and documents provide the foundation for more advanced accounting practices and financial analysis, guiding restaurant owners and managers toward successful financial stewardship of their businesses.

MANAGING RESTAURANT FINANCES

Budgeting for Restaurants

Creating and Managing a Budget – Budgeting is a critical process for restaurants, involving the estimation of future sales, costs, and profits to ensure financial stability and growth. A well-prepared budget helps restaurant owners:

  • Plan for future expenses and investments, including technology solutions or store remodels.
  • Set financial targets and measure performance.
  • Identify potential cash flow issues before they arise.

Creating a budget requires analyzing historical financial data, considering market trends, and anticipating changes in the business environment. Regularly reviewing and adjusting the budget is essential to account for unforeseen changes in sales, costs, or the economy.

Forecasting Sales and Expenses – Sales forecasting involves estimating future sales based on historical data, seasonal trends, and market analysis. Expense forecasting requires an understanding of both fixed costs (utilities) and variable costs (food, labor). Accurate forecasting helps in setting realistic budgets, managing cash flow, and making informed purchasing and staffing decisions.

Cost Control and Management

Food Cost Percentage – Food cost percentage is a key metric in restaurant finance, representing the cost of ingredients (cost of goods sold) as a percentage of sales. The industry standard for food cost percentage typically ranges from 28% to 35%, though this can vary based on the type of restaurant. Controlling food costs involves regular inventory management, negotiating with suppliers, minimizing waste, and adjusting menu prices or offerings as necessary.

Labor Cost Management – Labor costs, including wages, benefits, and taxes, are another significant expense for restaurants. Effective labor cost management strategies include:

  • Optimizing staff scheduling to match customer demand.
  • Investing in staff training to improve efficiency and reduce turnover.
  • Utilizing labor management software to track labor costs in real-time.

Operating Expenses Control —such as rent, utilities, marketing, and administrative costs—is essential for maintaining profitability. Strategies include negotiating favorable lease terms, monitoring utility usage, and carefully planning marketing expenses to ensure a good return on investment.

Pricing Strategies

Setting the right prices for menu items involves considering food costs, competitor pricing, and perceived value to the customer. Pricing techniques include:

  • Cost-plus pricing – Setting prices based on food costs plus a desired profit margin.
  • Competitive pricing – Setting prices in line with competitors, adjusted for differences in quality or service.
  • Value-based pricing – Setting prices based on the perceived value to the customer, which may allow for higher prices for premium dishes.

Psychological Pricing Strategies

Psychological pricing strategies leverage customer psychology to encourage more sales or higher spending per customer. Examples include:

  • Charm pricing – Using prices that end in .99 or .95 to make items appear cheaper.
  • Bundling – Offering menu items together at a slightly reduced price to increase perceived value.
  • Decoy pricing – Introducing a higher-priced item to make other options seem more reasonably priced.

Source: Conjointly

Effective budgeting, cost control, and pricing strategies are vital for the financial health of a restaurant. By carefully managing finances, restaurants can maximize profitability, sustain operations during challenging times, and invest in growth opportunities.

Dynamic Pricing

Dynamic pricing begins with the data. Many restaurants have data sets from their point-of-sale systems that include historical transactions, which can be bifurcated by a variety of subgroups and layered with outside data sets to tell a story about the restaurant’s consumers.  Data sets relevant to the restaurant industry can include the transaction day and time, the specific menu items purchased, the weather at the time of the transaction, if the transaction was on-premises or off-premise, if an event was occurring at the time of the transaction if it was purchased by a loyalty member, etc.  The data would then be analyzed to understand consumer buying patterns. Some restaurants introduced dynamic pricing models years ago by offering early bird specials or discounts during happy hour to help shift the dinner crowds to earlier times when the wait staff had more capacity. But new models are being implemented as technologists analyze data sets and further test price elasticity for restaurants. For example, it’s likely a consumer would be willing to pay higher prices at a sports bar on Monday night during a college football championship game than any other Monday night during the same month. It’s also proven that pizza delivery sales spike when it’s raining outside. Restaurant owners can adjust their pricing to reflect these peaks in demand.

Source: Ktchn Rebel

Dynamic pricing is entering the restaurant space and should be considered as a key to preserving eroding margins. The tech stack for restauranteurs will be important as they look to select a dynamic pricing technology solution and the subsequent integrations with their point of sale and inventory management systems.

Budgeting for Restaurants

Budgeting is a fundamental aspect of restaurant management, ensuring that financial resources are allocated efficiently to cover operational needs while also setting the groundwork for profitability and growth. Effective budgeting involves both the creation of a financial plan and ongoing management to adapt to the restaurant’s changing circumstances and goals.

Creating and Managing a Budget

Review Historical Data – Analyze past sales, costs, and profit margins to understand trends and patterns. This includes seasonal variations, the impact of marketing campaigns, and other factors influencing revenue and expenses.

  • Estimate Revenue – Forecast future sales based on historical data, market analysis, and any planned changes (e.g., menu updates, extended hours). Consider factors like seasonality, economic conditions, and competition.
  • Plan for Expenses – Categorize expenses into fixed and variable costs. Fixed costs might include rent, utilities, and salaries, while variable costs are associated with sales volume, such as food and beverage costs, and hourly labor.
  • Set Profit Goals – Based on revenue and expense projections, establish profit goals. This will help in making informed decisions about where to allocate resources and how to price menu items.
  • Create Contingency Plans – Include a buffer for unexpected expenses or fluctuations in sales. This helps in managing cash flow effectively and ensures the business remains solvent during slower periods.
  • Monitor and Adjust – Regularly review the budget against actual performance. Adjust forecasts and allocations as necessary to reflect changes in the business environment or operational efficiency.

Forecasting Sales and Expenses

Sales Forecasting

  • Analyze Trends – Use POS system data and accounting records to identify sales trends. Pay attention to daily, weekly, and seasonal fluctuations.
  • Consider External Factors – Events, holidays, and economic conditions can affect sales. Incorporate these into your sales forecast.
  • Set Realistic Expectations – Base forecasts on data rather than optimism. Setting achievable sales targets helps with accurate budgeting and financial planning.

Expense Forecasting

  • Fixed Expenses – These are predictable and relatively stable, such as rent, insurance, and certain salaries. Plan for annual increases or known changes.
  • Variable Expenses – Forecast variable expenses, like food costs and hourly wages, based on the projected volume of business. Use past percentages of sales for accuracy.
  • Unexpected Costs – Always allocate a portion of the budget for unforeseen expenses. This could include emergency repairs, price increases in supplies, or additional marketing efforts to boost sales.

Effective budget management in a restaurant involves a delicate balance between anticipating future needs and remaining flexible to adapt to actual outcomes. By carefully planning and regularly reviewing their budget, restaurant owners and managers can navigate financial challenges, capitalize on growth opportunities, and ensure the long-term success of their establishments.

Operating Expenses Control

Controlling operating expenses is critical for maintaining the profitability of a restaurant. These expenses include rent, utilities, marketing, repairs, and administrative costs. Effective management of these costs can significantly impact the bottom line.

  • Negotiate Favorable Lease Terms – Rent is often one of the largest fixed expenses. Negotiating favorable terms can reduce this significant cost, especially in competitive locations.
  • Monitor Utility Usage – Implement energy-efficient practices and equipment to reduce utility costs. This can include LED lighting, energy-efficient kitchen appliances, and monitoring usage during non-peak hours.
  • Streamline Marketing Expenses – Focus on high-return marketing strategies, such as social media and email marketing, which can be more cost-effective than traditional advertising. Track the return on investment (ROI) of marketing campaigns to allocate funds more effectively.
  • Regular Maintenance – Preventative maintenance on equipment and facilities can reduce the need for expensive emergency repairs and extend the lifespan of valuable assets.
  • Manage Inventory Efficiently – Reduce waste by monitoring inventory levels closely and using inventory management software. Implement practices like first-in, first-out (FIFO) to ensure older stock is used first.
  • Review and Renegotiate Contracts – Regularly review contracts with suppliers and service providers to ensure you’re getting the best rates. Don’t hesitate to renegotiate or switch providers to reduce costs.

Pricing Strategies

Pricing strategies are crucial for balancing customer satisfaction with profitability. The right pricing not only covers costs but also conveys value to customers, encouraging repeat business.

  • Charm Pricing – Prices ending in “.99” or “.95” are perceived as significantly lower than they are, making items seem more affordable.
  • Prestige Pricing -Setting prices higher to signal quality and luxury. This works well for restaurants positioning themselves as upscale dining experiences.

Source: Conjointly

  • Anchor Pricing – Displaying a more expensive item near similar, less expensive items can make the cheaper options seem like a better deal, encouraging purchases.
  • Bundling – Offering items together at a reduced total cost can increase the perception of value, encouraging customers to spend more than they might on individual items.

Implementing effective control over operating expenses and applying strategic pricing techniques are essential for the financial health and competitiveness of a restaurant.  These strategies help in optimizing profitability while ensuring value and satisfaction for customers.

RESTAURANT ACCOUNTING PRACTICES

Daily Sales and Cash Flow Management

Effective management of daily sales and cash flow is crucial for the operational success and financial stability of a restaurant. This involves careful tracking of income and expenses to ensure the business remains liquid to cover short-term obligations.

Tracking Sales

  • Utilize Point of Sale (POS) Systems – Modern POS systems not only process transactions but also track sales data in real time, providing valuable insights into customer behavior, popular items, and peak sales periods.
  • Daily Sales Reports – Generate and review daily sales reports to monitor the performance of the restaurant, identify trends, and make informed decisions about inventory, staffing, and marketing strategies.

Managing Cash Flow

  • Monitor Cash Reserves – Keep a close eye on cash reserves to ensure there are sufficient funds to cover daily operations, including purchasing inventory and paying staff.
  • Forecast Cash Flow – Use historical sales data to forecast future cash flow, accounting for seasonal variations and upcoming expenses. This helps in planning for potential shortfalls.
  • Manage Payables and Receivables – Negotiate favorable terms with suppliers to delay outflows of cash and encourage prompt payment from any debtors to ensure a steady inflow of cash.

Inventory Tracking Systems

  • Implement Inventory Management Software – Automated systems help track stock levels in real time, generate reorder alerts, and provide insights into usage patterns, helping to optimize inventory levels.
  • Regular Stock Takes – Conduct regular physical counts of inventory to verify stock levels, identify discrepancies early, and adjust records for accurate tracking.

Reducing Waste and Theft

  • Train Staff on Portion Control – Ensuring consistent portion sizes reduces food waste and ensures cost consistency.
  • Implement Security Measures – Use security cameras and restrict access to storage areas to minimize theft. Regular audits and checks can also deter pilferage.
  • Utilize Inventory Data – Analyze inventory data to identify items that frequently go to waste and adjust ordering accordingly. Consider donating excess food to reduce waste and benefit the community.

Managing Tips and Gratuities

  • Understand Legal Requirements – Familiarize yourself with local laws regarding the handling of tips and gratuities, including tip pooling and distribution.
  • Transparent Policies – Develop clear, fair policies for tip distribution and communicate these to staff to ensure understanding and reduce conflicts.
  • Track and Report Tips – Use POS systems to track tips accurately. This is important for tax purposes and for ensuring employees are compensated according to legal requirements.

Effective management in these areas is foundational to the smooth operation and financial health of a restaurant. By leveraging technology, implementing best practices, and staying informed about legal requirements, restaurant owners and managers can optimize their operations, reduce costs, and enhance profitability.

TAXATION & COMPLIANCE

Navigating the complex landscape of taxes is crucial for restaurant owners to ensure compliance and maximize profitability through strategic tax planning and deductions.

Federal, State, and Local Taxes

  • Federal Taxes – Include income taxes, payroll taxes (Social Security, Medicare), and unemployment taxes. Restaurants must also comply with federal tax regulations on tips, reporting them as part of employees’ income.
  • State Taxes – These can include state income taxes, sales taxes on goods and services, and employment taxes. Requirements vary significantly from state to state.
  • Local Taxes – This may involve property taxes on business premises and local sales taxes, which can differ even within states. Restaurants in certain areas may also be subject to special taxes, like those for tourism or entertainment districts.

Tax Deductions and Credits for Restaurants

  • Cost of Goods Sold (COGS) – The purchase of food and beverage products for sale can be deducted from income.
  • Business Expenses – Operating expenses such as rent, utilities, marketing, and payroll are generally deductible.
  • Equipment and Improvement Depreciation – The cost of kitchen equipment, furniture, and improvements to the restaurant space can often be depreciated over time, providing tax benefits.
  • Employee Benefit Programs – Costs associated with providing health benefits, retirement plans, and other employee perks can sometimes be deductible and offer tax credits.
  • Tax Credits – Specific tax credits may be available for restaurants, such as those for hiring veterans or individuals from certain target groups, or for making energy-efficient improvements. There is also a FICA Tax Tip Credit for employers available.

Source: 7Shifts.com

Regulatory Compliance for Restaurants

  • Health and Safety Regulations – Compliance with local health department standards for food safety, sanitation, and employee health is mandatory.
  • Labor Laws – Adhering to federal, state, and local labor laws, including those governing minimum wage, overtime, and working conditions, is crucial.
  • Licensing and Permits – Restaurants must obtain and renew necessary business licenses, liquor licenses, and other permits specific to their location and type of service.
  • Franchise Disclosure Document- The franchise disclosure document (FDD) is a legal disclosure document that must be given to individuals interested in buying a U.S. franchise as part of the pre-sale due diligence process. The document contains information essential to potential franchisees about to make a significant investment.  The FDD requires extensive information about the concept and franchisor entity, including that the FDD must include three years of audited financial statements that comply with United States Generally Accepted Accounting Principles (US GAAP).

Audits and Financial Reviews

  • Preparation – Keeping detailed and organized records of all financial transactions, tax filings, and compliance documentation is essential for smoothly navigating audits.
  • Professional Support – Engaging a CPA or tax advisor (like Windham Brannon) who is experienced in the restaurant industry can provide valuable guidance and representation in case of an audit.
  • Proactive Compliance – Implementing internal controls and regularly reviewing compliance with tax laws and regulatory requirements can help prevent issues before they arise.

Understanding and managing the intricacies of taxes and compliance are critical for the success and legal operation of a restaurant. By staying informed, diligently maintaining records, and seeking professional advice, when necessary, restaurant owners can navigate these challenges effectively, ensuring their businesses remain compliant and financially healthy.

IMPLEMENTING ACCOUNTING SOFTWARE & TECHNOLOGY

Selecting the appropriate accounting software is a pivotal decision for restaurant owners, as it can significantly impact the efficiency of financial management and the accuracy of financial reporting.

Features to Look for in Restaurant Accounting Software

  • User-Friendly Interface – The software should be intuitive and easy to use, minimizing the learning curve for you and your staff.
  • Inventory Management – Look for software that offers robust inventory tracking and management features, enabling you to monitor stock levels, costs, and wastage in real time.
  • Sales and Revenue Tracking – Integration with your Point of Sale (POS) system for automatic tracking of daily sales and revenue is crucial for accurate and timely financial reporting.
  • Payroll and Employee Management -The ability to manage payroll within the software, including tracking hours, managing tips, and processing paychecks, can streamline operations significantly.
  • Compliance and Reporting – The software should facilitate compliance with tax laws and regulations, including the generation of necessary reports for tax filing and audits.
  • Scalability – Choose software that can grow with your business, accommodating additional locations or changes in operation size without requiring a system overhaul.
  • Customer Support – Reliable customer support is essential, including access to training, tutorials, and technical assistance.

Integration with POS Systems

  • Seamless Data Transfer – Integration allows for the automatic transfer of sales data into the accounting system, reducing manual entry errors and saving time.
  • Real-Time Financial Overview – With POS integration, you can have a real-time view of your financial situation, including sales, costs, and profitability.
  • Simplified Reconciliation – Integrated systems simplify the process of reconciling sales and bank deposits, ensuring accuracy in your financial records.

Automation of Accounting Tasks

  • Automated Data Entry – Automate the entry of invoices, receipts, and other financial transactions to reduce manual errors and save time.
  • Scheduled Reporting – Set up automatic generation and distribution of key financial reports, ensuring timely access to important information.
  • Automatic Reconciliation – Use software that automatically reconciles bank transactions with your records, highlighting discrepancies for review.

Using Data Analytics for Financial Decision-Making

  • Trend Analysis – Analyze sales trends, cost fluctuations, and profitability over time to identify patterns and opportunities for improvement.
  • Performance Metrics – Monitor key performance indicators (KPIs) such as food cost percentage, labor cost ratio, and table turnover rate to gauge operational efficiency.
  • Predictive Analysis – Use historical data to forecast future sales, cash flow, and inventory needs, enabling proactive management of resources and expenses.

By choosing the right accounting software and leveraging technology for efficiency, restaurants can streamline their financial operations, enhance accuracy, and make informed decisions based on comprehensive financial insights. This approach not only improves day-to-day management but also contributes to long-term strategic planning and profitability.

RESOURCES AND TOOLS

Navigating the financial landscape of the restaurant industry requires access to the right tools and resources. From accounting software that streamlines operations to educational content that enhances financial literacy, and the expertise of professionals, these resources are invaluable for restaurant owners aiming to optimize their financial management practices.

Role of Artificial Intelligence (AI)

AI is changing the way most industries operate and restaurants are no exception. It handles repetitive tasks and frees up staff to focus on the patron experience. Conversational AI platforms can take over first contact with patrons. These platforms integrate with your other capital investments— your website, mobile app, kiosks, drive-through operations and point of sale (POS) systems.

Patrons are comfortable with contactless order kiosks and AI-driven virtual assistants, and AI can answer questions, make recommendations, and take orders. It’s an ideal fit with interactive in-store kiosks and mobile apps. These investments drive more effective loyalty programs, personalizing rewards, and acquiring customer data for more targeted marketing.

Voice AI also offers new ways to interact with customers:

  • Integration with Alexa and Google, so restaurants can pull up a customer’s favorite menu items or past orders as soon as they call. This reduces ordering time from a few minutes to a few moments.
  • Wendy’s has partnered with Google Cloud for speech-to-text technology to transcribe drive-through orders or by phone into text for staff. This improves accuracy even with reduced staffing. The next step will be to use voice recognition, identifying customers from previous orders and offering more personalization.
  • AI-controlled kiosks increase capacity and accelerate food ordering, preparation, and payment. These kiosks integrate with POS systems, kitchen display systems, and mobile order solutions.
  • Conversation AI handles call-ahead, web, and mobile order platforms for contactless ordering. Virtual assistants answer customer queries, make recommendations, and process orders.

AI Fine-Tunes Operations

AI works in the back of the house too. It consumes data as part of machine learning, to understand your customers, suppliers, and operations. Your various software solutions feed a steady stream of data to AI, helping you run more efficiently.

Over time, AI learns, adapts, and makes operations more efficient in multiple ways:

  • Make inventory orders more predictable and reduce the amount of time required to place orders.
  • Optimize labor usage for peak hours, with staffing predictions based on factors such as customer traffic, seasonality, and promotions.
  • Optimize your menu. AI segments customers according to tastes and preferences, looking at the interaction between social networks and other media, and using this data to classify customers as positive, negative or neutral. You can use this information to create targeted, more effective marketing campaigns and create dishes for customer preferences.
  • Predict sales. AI algorithms learn from product promotions, social media, market trends, consumer demand, and weather to predict sales. This helps you plan staffing and inventory ordering.
  • Restaurants now use AI-powered analytics to increase sales with dynamic menu personalization. AI recognizes opportunities to upsell or offer unique menu items, based on historical preferences, weather or the time of day. Over time, these unique offerings build customer loyalty and retention.

Recommended Accounting Software

  • QuickBooks Online – Widely recognized for its comprehensive features, QuickBooks Online offers robust accounting tools, including inventory management, payroll, and reporting. Its user-friendly interface and extensive integration capabilities make it a popular choice for small to medium-sized restaurants.
  • Xero – Known for its strong collaboration features and cloud-based system, Xero allows for real-time financial tracking and offers features such as invoicing, payroll, and expense management. Its integration with numerous third-party apps makes it versatile for various restaurant needs.
  • Sage 50cloud – Combining the reliability of desktop software with cloud mobility, Sage 50cloud provides powerful accounting solutions with advanced inventory management and business analytics, suitable for restaurants looking for scalability and detailed financial control.
  • Restaurant365 -Specifically designed for the restaurant industry, Restaurant365 incorporates accounting, inventory, scheduling, and payroll into one platform. Its specialized features for restaurant operations, including recipe costing and operational reporting, make it a comprehensive tool for larger establishments or chains.
  • Olo – Cloud-based accounting software designed specifically for restaurants to manage daily financial operations including point of sale, inventory, purchasing, reporting, and labor. Key features of Olo include customizable reporting, integration with food delivery services, and tools to optimize restaurant profitability.

Educational Resources

Websites

  • The Georgia Restaurant Association provides advocacy, resources and networking for restaurant operators in Georgia.
  • The National Restaurant Association offers resources, articles, and guides on managing restaurant finances and navigating industry challenges.
  • AccountingCoach.com provides free accounting courses and materials, which can be beneficial for understanding basic accounting principles.
  • The International Franchise Association
  • The Franchise Times provides news and timely information about franchising.
  • QSR Magazine reports on the quick-service restaurant industry, to include fast food, fast casual, coffee, snacks and concessions within the food industry.
  • Nation’s Restaurant News is a national publication that provides news and insights into the foodservice industry.

Professional Assistance

  •  Complex Financial Situations – As your business grows or if you’re navigating through complex tax situations, the expertise of a professional can ensure compliance and optimize tax strategies.
  • Time Constraints – If managing the restaurant’s finances becomes too time-consuming, hindering focus on the core business, it might be time to seek professional help.
  • Financial Challenges – During financial difficulties, such as cash flow problems or debt management issues, a professional can offer strategies and solutions to navigate out of those challenges.
  • Business Expansion – Planning to expand or sell your restaurant can involve complex financial analysis and planning, where professional advice is invaluable.

Leveraging these resources and tools can significantly enhance the financial management and overall success of a restaurant. By staying informed and seeking professional advice, when necessary, restaurant owners can make strategic decisions that drive growth and profitability.

2024 RESTAURANT TRENDS

  • Smaller square footage is trending – The COVID-19 pandemic has driven a permanent shift to takeout, drive-through and delivery methods for customers, which has subsequently created a trend for smaller footprints in coffee chains and other specialized sects, such as pizza. Additionally, the cost of capital, building materials, rent and land is high, further incentivizing brands to shrink their square footage. At Windham Brannon, we recommend that any operators looking to open new locations should closely review and analyze their forecasted profit and losses (P&Ls) to determine if the decrease in rent costs with smaller square footage exceeds the decrease in sales as a result of a smaller footprint. You may find that your EBITDA is unchanged and that it’s faster and cheaper to build the smaller location.
  • Automation and artificial intelligence (AI) are crucial to success – It is impossible to ignore the benefits of automation during a period in which labor and supply chain costs are extremely high. As consumers are unwilling to accept menu price increases that match rising operating costs, restaurants are being forced to find other solutions to protect margins. While the initial investment is high, the returns on a brand utilizing AI and automation in front and back house operations are proving impressive. Their incorporation into a strategy for growth will become essential.
  • Working from home has impacted customer behavior patterns at restaurants – As more of the workforce continues to work at home or remotely, customers are visiting restaurants during different times of the day and closer to their homes or places of remote work, reducing commute time. Customers are spending more time in leisure activities (golf, skiing, salons, shopping, etc.) and looking for restaurant options within or near these locations. Additionally, overall retail spending is down in cities and moving to suburban areas. As same-store sales continue to decrease, we recommend that restaurants analyze their store sales data by location, region, and market to identify trends, as well as understand when peak sales are actually occurring, then shift labor and staffing to reflect these changes. Windham Brannon can help you understand and identify such sales trends in your data.
  • California is changing the landscape for the restaurant industry – Since the passing of California’s controversial Fast Act Bill in 2022 (AB 257), the restaurant industry has been abuzz with the impacts the bill is expected to have on the bottom line. Even with later amendments and changes to AB 257 from the QSR legislative Agreement, the impact has expanded far beyond California’s borders when it comes to wage increases, including price increases, pressure for comparability from other regions, risk of a “copycat effect” in other states and jurisdictions, stalled economic growth for new franchisees in California and potentially a decrease in entry-level jobs.
  • How large franchisor brands can support franchisees for success – The conference featured much discussion regarding how large franchisor brands can support their franchisees with a strong, well-developed business model that sets up the franchisees for success. Windham Brannon’s professionals recommend that franchisors discuss with their team of advisors how to promote their own brands in 2024, including discussion about how key business plans like smaller footprints, simplified menu offerings, better training and changes to “value meals” to account for rising inventory costs can make for very successful bottom line.

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