Restaurant Accounting Chart of Accounts – Have you ever looked at your profit and loss statement and wondered what was going on in the line items? Have you ever wondered what expenses go into this line item and decided not to call your accountant because you're worried you'll be charged more? Is your profit and loss statement something you use to pay your taxes rather than as an essential tool for measuring the success of your restaurant? Let's take a look at how the restaurant chart of accounts can change the way you look at your income statement and how it benefits your restaurant business.
#restaurantaccounting #restaurantfinancials #restaurantchartofaccounts

****Why your restaurant is so difficult: https://dsp.coach/transformation-opt-in

I wrote a book for restaurateurs and managers: https://amzn.to/2ZYlL7Y
Be sure to subscribe to this channel to receive alerts when I post a new tip: http://bit.ly/2Yk484P
Take me anywhere and listen to my podcast: https://dsp.coach/podcast
**********************************
Welcome to my YouTube channel. I'm David Scott Peters, a restaurant coach and speaker who teaches restaurateurs how to cut costs and increase profits with my trademark Restaurant Prosperity formula. Known as The Restaurant Industry Expert, I apply my no-BS style to teach and motivate restaurateurs to take control of their business and finally realize their full potential. Thousands of restaurants have used my formula to transform their businesses. To learn more about me and my coaching program, visit http://www.davidscottpeters.com.

**********************************
Let's talk about some of the common mistakes in the restaurant chart of accounts and why it doesn't work very well for most restaurateurs. I want to make sure that when you look at your chart of accounts, you know what you're looking at.

In restaurant accounting, there is GAP versus actual utility. GAP stands for Generally Accepted Accounting Principles. Your CPA or accountant might do things based on GAP. They take the cost of goods sold divided by your total sales, which gives you a food cost of about 10 percent compared to the useful, which is the cost of goods sold divided into food sales. This version gives you a food cost of 30 percent, a number you can understand. This goes beyond “generally acceptable.”

I see a lot of restaurateurs who simply list food and alcohol on their accounting plan. That doesn't tell you much. You need it divided into food, drink N/A, bottled beer, draft beer, wine, alcohol, merchandise. Each cost of goods sold number will be different when you get to your budgeting part. To do this, you need to measure them individually.
I also see restaurants taking their entire vending bill and putting it in the food. But your general purchases aren't just about food. You do not sell toilet paper (except in 2020!). That has no place in there. You do not sell small items or small equipment. Instead, you must split the food portion of these invoices that is just the cost of goods sold. Then take all the other numbers and put them as line items, as expenses. This gives you a clear picture of what is happening in your business.

When it comes to work, I often see a salary or a schedule, and front or back of the house. How do you know if there is a problem and where the problem is? How do you measure? You need to divide it into salaried managers, hourly managers, and full-service restaurants, servers, bus hostesses, barbacks, bartenders, dishwashers, prep cooks, line cooks, etc. This way you can see where the problem spots are instead of a large number called work.

Although I ask for more detail in your chart of accounts, it is possible that you are being too detailed in your chart of accounts. If you have so many budget items that it's difficult to look at your numbers, breaking each expense into its own little category can make things more difficult.

Instead, you need to find a balance so that when you look at your chart of accounts, your income statement, you can read it. It serves as a decoder ring, making it easier to decipher problems.

**********************************
Learn how to run a catering business on my other platforms:
Facebook: http://www.facebook.com/davidscottpetersbiz
Instagram: http://www.instagram.com/davidscottpeters
Twitter: http://www.twitter.com/restaurantxpert
Subscribe to YouTube: http://bit.ly/2Yk484P
Podcast page: https://dsp.coach/podcast

Please take the opportunity to connect and share this video with your friends and family if you find it useful.