As a small business restaurant owner in Minnesota, you know how important it is to keep detailed sales records and manage your cash flow. But do you have the right tools and strategies to do so effectively?
Invest in a Robust POS System
One of the most essential tools for any restaurant is a point-of-sale (POS) system that can handle all your transactions and record-keeping needs. A good POS system should allow you to capture and retrieve the following information:
- Sales totals by employee: Monitor the performance and productivity of your staff, as well as identify any discrepancies or errors.
- Taxes: Calculate and report your sales tax obligations accurately and timely, avoiding penalties and passing audits.
- Tips: Track and distribute tips among your employees fairly and legally, as well as report them as income for tax purposes.
- Discounts: Measure the effectiveness of your promotions and loyalty programs, as well as adjust your pricing strategy accordingly.
- Product details: Analyze your sales trends and customer preferences, as well as manage your inventory levels and ordering.
Looking for POS system recommendations? Check out Toast, Square, Clover, and TouchBistro and go from there.
Review Detailed Daily Sales Reports and Reconcile Cash
A best practice in the restaurant industry is reviewing sales reports and reconciling cash daily. Restaurants can be a frantic place, opening the door for fraud if not managed consistently and meticulously. Depending on your size, this may be the owners’ or managers’ responsibility. Look for the following:
Cash ties to the POS system
If it doesn’t, look for signs of theft or fraud. Watch out for the wagon wheel scheme, a common restaurant fraud technique where a server transfers an item around multiple tickets and pockets the cash.
Total Sales, Sales by item, and Sales by employee
Depending on your restaurant, you may review one or all of these categories daily. If you know your breakeven numbers, total sales can help you quickly tell if you had a good or bad day. Sales by item can confirm your best sellers and assist in reordering, as well as adjusting budgets and forecasts. Sales by employee can highlight the best and worst performers, or lead to a discussion on utilization and staffing needs at different times.
Key Performance Indicators
Many businesses use key performance indicators (KPI’s) to quickly analyze the information that matters most to them, and one or more usually include cash and sales. For instance, a KPI for cash could be cash greater than a certain dollar amount. Reconciling cash daily would then tell you whether you met that KPI, and if you failed, an immediate action item would follow. Another example could be the owner that delegates daily sales review to the managers, who then report sales KPI’s to the owner at the end of the day. This allows the owner to monitor the performance of multiple locations quickly without getting into the details.
Monitor Inventory Closely
If you are in the food service industry, you know how much food waste can impact your bottom line. According to the USDA, over a third of all available food goes uneaten, while a study by ChefHero shows restaurants are leaving $2 billion in profits on the table due to food waste. To reduce food waste and save money, you should:
- Track your inventory levels and usage regularly and accurately
- Use a first-in, first-out (FIFO) method to sell inventory and avoid spoilage
- Implement portion control and standard recipes to minimize overproduction and leftovers
- Donate or compost any excess or unsold food items
Have a Budget and Financial Plan
Finally, one of the best ways to ensure the success of your small business restaurant is to have a realistic and comprehensive budget and financial plan.
A budget can help you:
- Set clear goals and expectations for your revenue and expenses
- Allocate your limited resources effectively
- Measure your progress and performance against your targets
A financial plan can help you:
- Project your cash flow and profitability, both short-term and long-term
- Evaluate the feasibility and viability of your business model and current strategies
- Plan for contingencies and emergencies
Working with Haworth & Company, Ltd.
As a small business owner in Minnesota, you don’t have to do it all alone. Rely on the expertise and experience of Haworth & Company, Ltd., a certified public accounting firm that specializes in serving small businesses in the Twin Cities and Rochester. We can help you compile monthly financial statements, process payroll, file tax returns, and discuss any questions you have running your small business. Contact us today to schedule a free consultation and find out how we can help you optimize your accounting practices and boost your profitability.
Disclaimer: This blog content is for general informational purposes only, should not be considered professional advice, and does not establish a client relationship. Haworth and Company is not liable for the accuracy of this information or the content of external links. Please use this information at your own risk, ensuring it suits your specific needs, and consult with a certified tax professional for your own personalized guidance.
