Restaurant margins are thin. According to the National Restaurant Association, the average full-service restaurant operates on 3-5% net profit margins. Quick service does slightly better at 6-9%. Either way, there’s almost no room for error. A few points of food cost drift, an unnoticed labor inefficiency, or a cash handling gap can erase an entire month’s profit.
Yet most restaurant owners treat accounting as an afterthought—something to deal with at tax time rather than a tool for daily decision-making. This approach might work in industries with 20% margins. In restaurants, it’s a recipe for failure.
Restaurant accounting services exist specifically because restaurant finances differ from typical small business accounting. The combination of daily cash transactions, inventory that spoils, tipped employees, high turnover, and tight margins creates complexity that generic bookkeepers often mishandle. Getting restaurant accounting right isn’t about compliance alone—it’s about survival.
This guide covers what restaurant accounting services include, what they cost, and how to evaluate providers who actually understand the industry.
Why Restaurant Accounting Is Different
Generic small business accounting doesn’t translate cleanly to restaurants. Several factors create unique challenges.
Daily cash and transaction volume overwhelms standard processes. A busy restaurant might process 300 transactions daily across multiple payment types—cash, credit cards, mobile payments, gift cards, third-party delivery. Each transaction needs recording. Each payment type has different timing and fees. Reconciling a restaurant’s books requires systems built for this volume.
Inventory that expires demands tracking most businesses don’t need. Food cost typically represents 28-35% of revenue in restaurants. A few percentage points of waste, theft, or spoilage directly hits the bottom line. Effective restaurant accounting tracks inventory closely enough to identify problems before they become catastrophes.
Tipped employee accounting involves compliance complexity. Tip reporting, tip credits, tip pooling regulations, and the interplay between tipped minimum wage and regular minimum wage create payroll challenges that standard bookkeepers often botch. The IRS pays close attention to restaurant tip compliance—mistakes here trigger audits and penalties.
Multiple revenue streams complicate revenue tracking. Dine-in, takeout, delivery, catering, private events, merchandise, gift cards—each stream has different economics and may require separate tracking. Third-party delivery platforms like DoorDash and Uber Eats add another layer, with their own fee structures and payment timing.
Prime cost management is the central metric most generic accountants don’t understand. Prime cost—food cost plus labor cost—should typically run 55-65% of revenue. Restaurants that don’t track prime cost weekly (not monthly) lack the visibility to make timely adjustments. By the time monthly statements arrive, problems have already cost thousands.
What Restaurant Accounting Services Include
Specialized restaurant accounting goes beyond basic bookkeeping to address industry-specific needs.
Daily sales reconciliation matches POS reports to bank deposits and payment processor settlements. This catches discrepancies immediately rather than letting them accumulate. Effective providers reconcile daily, not monthly, because problems compound quickly in high-volume environments.
Food cost tracking and analysis connects purchasing to sales. What’s your actual food cost percentage this week? Which menu items have margins below target? Where is waste occurring? These questions require accounting systems integrated with inventory management—not just transaction recording.
Labor cost monitoring tracks wages, overtime, and benefits against revenue. Restaurant labor cost should typically run 25-35% of revenue, but this varies by concept and service level. Effective restaurant accounting provides weekly labor cost percentages so owners can adjust scheduling before monthly statements reveal problems too late.
Prime cost reporting combines food and labor into the metric that matters most. Weekly prime cost reports enable operational adjustments that monthly financial statements cannot. If prime cost creeps from 60% to 65% over four weeks, that’s 5% of revenue lost—potentially the entire net margin.
Tip compliance and reporting ensures proper handling of tips, service charges, and gratuities. This includes tip allocation for pooling arrangements, proper payroll tax treatment, and documentation that satisfies IRS requirements. Getting this wrong creates liability that can surface years later.
Accounts payable management handles vendor relationships efficiently. Restaurants juggle dozens of vendors—food distributors, beverage suppliers, equipment maintenance, linens, cleaning supplies. Managing payment timing to preserve cash while maintaining vendor relationships requires attention that busy operators rarely have.
Sales tax compliance addresses the complexity of restaurant taxation. Many jurisdictions tax food differently based on whether it’s consumed on-premises or taken to go. Alcohol often has separate tax treatment. Delivery may have different rules than dine-in. Specialized providers understand these nuances.
Restaurant Accounting Service Tiers
| Service Level | What’s Included | Typical Monthly Cost |
|---|---|---|
| Basic Bookkeeping | Transaction recording, reconciliation, monthly P&L | $500–$1,000 |
| Restaurant-Specialized Bookkeeping | Above + daily sales reconciliation, weekly prime cost | $1,000–$2,000 |
| Full Accounting + Controller | Above + food cost analysis, labor monitoring, compliance oversight | $2,000–$4,000 |
| CFO-Level Support | Above + strategic planning, financing support, multi-unit reporting | $4,000–$8,000+ |
Single-location restaurants typically need restaurant-specialized bookkeeping at minimum. Multi-unit operators benefit from controller or CFO-level support that provides oversight across locations.
Key Metrics Restaurant Accounting Should Track
Your accounting provider should deliver visibility into metrics that drive restaurant profitability.
Food cost percentage measures cost of goods sold against food revenue. Target varies by concept—fine dining runs higher than fast casual—but tracking weekly reveals trends before they become crises. A 2% drift over two months might represent $20,000+ in lost margin for a million-dollar restaurant.
Labor cost percentage measures total labor expense against revenue. This includes wages, payroll taxes, benefits, and workers’ comp. Tracking by day-part (lunch vs dinner) and by role reveals optimization opportunities that aggregate numbers hide.
Prime cost percentage combines food and labor. This single number tells you more about operational health than almost any other metric. Weekly prime cost tracking is the minimum standard for well-managed restaurants.
Revenue per labor hour measures productivity. How much revenue does each hour of labor generate? Tracking this by shift and day reveals scheduling inefficiencies and helps optimize staffing.
Average check size tracks revenue per transaction. Changes in average check—up or down—signal shifts in customer behavior, menu mix, or server performance worth investigating.
Table turnover (for dine-in) measures how many times each seat generates revenue during a shift. Combined with average check, this determines revenue capacity and highlights opportunities to improve flow.
Choosing a Restaurant Accounting Provider
Not all accounting providers understand restaurants. These criteria help identify those who do.
Restaurant-specific experience is non-negotiable. Ask directly: how many restaurant clients do you serve? What percentage of your practice is restaurants? Providers who dabble in restaurants alongside other industries rarely develop the specialized knowledge the industry requires.
POS system familiarity affects integration quality. Does the provider work with your point-of-sale system? Can they pull data automatically or does everything require manual entry? Toast, Square, Clover, Aloha, and other systems each have different data structures. Providers experienced with your POS onboard faster and deliver cleaner data.
Prime cost reporting capability separates restaurant specialists from generalists. If a provider doesn’t mention prime cost in their first conversation, they probably don’t understand restaurant economics. Weekly prime cost reporting should be standard, not an upgrade.
Tip compliance expertise protects you from liability. Ask how they handle tip reporting, tip credits, and pooling arrangements. Hesitation or vague answers suggest inadequate knowledge. IRS scrutiny of restaurant tip compliance is real—you need a provider who gets this right.
Inventory integration enables food cost tracking. Can the provider connect with your inventory management system? Do they support theoretical vs actual food cost analysis? Providers who track only purchases without connecting to sales miss the analysis that actually matters.
References from similar restaurants validate capability. A provider who’s excellent for fine dining may struggle with quick service. Ask for references from restaurants similar to yours in concept, volume, and complexity.
Common Restaurant Accounting Mistakes
Certain patterns consistently create problems. Avoiding these mistakes protects margins and compliance.
Tracking food cost monthly instead of weekly allows problems to compound. A food cost issue that persists for four weeks costs four times what catching it after one week would have. Insist on weekly reporting at minimum.
Ignoring tip compliance creates future liability. The IRS audits restaurants frequently, and tip-related findings are common. Proper documentation, accurate reporting, and compliant allocation procedures protect against penalties that can dwarf any accounting savings.
Using generic chart of accounts obscures restaurant-specific insights. Restaurant accounting should separate food cost from beverage cost, track labor by role, and categorize expenses in ways that enable operational analysis. Generic structures designed for professional services firms don’t provide useful visibility.
Failing to reconcile daily lets discrepancies accumulate. In high-volume cash environments, small daily variances add up quickly. A $50 daily discrepancy is $1,500 monthly—material money in a thin-margin business. Daily reconciliation catches issues while they’re still traceable.
Treating accounting as backward-looking misses the point. Restaurant accounting should drive operational decisions, not just satisfy tax requirements. If your accounting only tells you what happened last month, it’s not serving the business.
Multi-Unit Restaurant Accounting
Operators with multiple locations face additional complexity that basic services can’t address.
Consolidated reporting should aggregate location performance while preserving unit-level visibility. You need to see each location’s prime cost, each location’s labor efficiency, and each location’s contribution—not just total company results.
Standardized chart of accounts across locations enables comparison. If one location categorizes expenses differently than another, you can’t benchmark performance or identify outliers.
Inter-company transactions require proper elimination. Commissary operations, shared services, and management fee allocations create accounting entries that must be handled correctly for accurate unit-level P&Ls.
Variance analysis identifies locations that deviate from targets or peers. Which location has food cost 3% above the others? Which has labor productivity 20% below? Multi-unit reporting should surface these variances automatically.
For multi-unit operators, consider providers offering multi-location business accounting with experience managing consolidated restaurant portfolios.
When Restaurants Need More Than Bookkeeping
Basic bookkeeping serves some restaurants adequately. Others need additional support.
Approaching financing or investment requires financials that satisfy lender or investor scrutiny. Banks and investors can tell when financial statements were hastily assembled. Controller-level oversight ensures your books support the financing you need.
Opening additional locations introduces complexity that basic bookkeeping can’t handle. Construction accounting, pre-opening expenses, multi-entity structures, and growth planning require financial guidance beyond transaction recording.
Experiencing margin pressure demands analysis that identifies causes. Is food cost rising because of waste, theft, purchasing prices, or menu mix? Is labor inefficient due to scheduling, overtime, or turnover? Diagnosing these problems requires analytical capability that bookkeepers typically lack.
Preparing for sale requires financials that support valuation. Buyers scrutinize restaurant books carefully. Clean, well-documented financials with proper accounting treatment command higher multiples than messy books that raise questions.
For strategic guidance beyond accounting, see our overview of fractional CFO services and how they apply to restaurant operations.
Frequently Asked Questions
What do restaurant accounting services include?
Core services include daily sales reconciliation, bank and credit card reconciliation, accounts payable management, payroll recording, and financial statement preparation. Restaurant-specialized providers add food cost tracking, labor cost monitoring, prime cost reporting, and tip compliance support. Full-service providers include controller oversight and strategic analysis.
How much do restaurant accounting services cost?
Basic bookkeeping runs $500 to $1,000 monthly. Restaurant-specialized services with prime cost reporting cost $1,000 to $2,000. Full accounting with controller oversight ranges from $2,000 to $4,000. Multi-unit operators or those needing CFO-level support pay $4,000 to $8,000 or more. Costs vary based on transaction volume and complexity.
What should restaurant food cost percentage be?
Target food cost varies by concept. Fast casual typically runs 25-30%. Casual dining runs 28-32%. Fine dining may run 32-38%. The key is tracking your target consistently and investigating variances quickly. A 2-3% drift from target represents significant margin erosion in thin-margin restaurant operations.
How often should restaurants review financial reports?
Weekly at minimum for prime cost (food + labor). Daily for sales reconciliation and cash management. Monthly for full financial statements, though these should confirm what weekly tracking already revealed rather than delivering surprises. Restaurants that only review finances monthly lack the visibility to manage effectively.
Do restaurants need specialized accountants?
Yes—generic small business accountants frequently mishandle restaurant-specific issues including tip compliance, food cost tracking, and prime cost management. The combination of high transaction volume, perishable inventory, tipped employees, and thin margins creates complexity that requires specialized knowledge.
Getting Restaurant Accounting Right
Restaurant accounting services aren’t overhead—they’re operational infrastructure. The visibility they provide enables decisions that protect margins, ensure compliance, and identify problems before they become crises.
For restaurants operating on 5% margins, the difference between adequate and excellent financial management might be the difference between profit and loss. Investing in providers who understand the industry pays returns that far exceed their cost.
GetExact provides restaurant accounting services designed for the industry’s unique demands—daily reconciliation, weekly prime cost tracking, tip compliance, and the strategic oversight that multi-unit operators need. If your current accounting doesn’t provide the visibility your restaurant requires, schedule a conversation to discuss how specialized support can improve your operation.
