Running a restaurant is hard work, and handling restaurant accounting definitely isn’t the easiest part of the job. When you’re a busy restaurateur, it can be hard to stay on top of your numbers, especially for multi-unit operations. And for restaurant accountants, there’s plenty of data to manage and lots of moving parts.
Even a slight hiccup can have your business feeling more sluggish than us after three brownie sundaes. But why is budgeting and sales forecasting so important anyway? How do you create a more efficient back office? We asked one of our accounting partners to find out.
Faysal Tay helps restaurant owners nationwide gain financial clarity through robust bookkeeping, financial reporting, and CFO services. Alongside founder Hiba Saab Tay, he helped grow The Bookkeeper from a regional New Orleans firm into an award-winning national practice.
Guided by a vision of a world where every business achieves financial clarity and prosperity, he helps owners align financial health with performance goals and long-term outlook. His approach supports stronger decisions, confident planning and sustainable growth. Under his leadership, the firm remains rooted in integrity, diligence, trust, impact and community while earning recognition as one of the restaurant industry's most trusted financial partners.
He shared, “At the Bookkeeper, we strongly believe that to know your business, you have to know your numbers. We do that by leveraging tools and helping clients understand their numbers at a deeper level to unlock their potential. When we started at MarginEdge, we were in an effort to help our clients choose the best path forward for their business, and were looking for clients that could help leverage restaurants in particular. So 2020 was the first year we started working with clients using MarginEdge; it was a group of restaurants whose previous tool wasn’t working out for them.”
Now that we’ve learned a little about our expert, let’s take a look at a few of his hot takes when it comes to restaurant accounting and bookkeeping.
“People get budgeting and forecasting confused and think they’re the same thing, but in reality they're not. A budget is when you enter a year with a plan. A budget is saying, ‘This is what my budget is going to look like. This is what I'm going to do for a year.’
Forecasting is taking that budget, making sure that you're tracking where you are and understanding, ‘Am I hitting the numbers or am I not?’
You can adjust as you go to ensure you stay within your budget. This is very important for any business, but when you look at restaurants, I would take it to a deeper level, since you usually update your budget forecast monthly.
A restaurant forecast needs to be updated and tracked every week because the number of variables that impact a restaurant are much greater than a typical business. There are guest counts, weather, tourism, local events, labor availability, inflation, and changes in consumer behavior just based on the economy. Any one of those can impact how the restaurant sees the numbers come in.
So that's on the revenue side, but on the expenses side, you also have cost of goods sold (COGS). You're tracking the cost for items that you buy, labor costs, front of the house, back of the house. It's not just ‘How much did we sell?’ but also ‘How much are we keeping?’ And every single item in there, all the Prime Costs that are required to be tracked at the restaurant level, need to be tracked in the forecast.
Let’s say the budget is 30% food cost. Are we meeting that, or are we seeing fluctuations? That's where leveraging tools makes a big difference, because the current information that you're looking at is how you update the forecast.
For example, with MarginEdge, it helps you track all the expenses in one place, meaning all the items you're buying, your Prime Costs and your actual versus theoretical.
As a percentage point, let's say with food cost, if you don't catch small mistakes weekly, that becomes something that is easily missed. When you start looking at it a month later, you realize that you lost half to 1%, and that goes to the bottom line. So while budgeting and forecasting are required for any business, in restaurants, it’s very volatile, and numbers can go up or down quickly, so you have to be on top of it.”
“Bill pay is a practical task you do to keep your vendors happy and stay on track. In reality, bill pay means cash flow. So, we're understanding, ‘What do we have to pay for?’ and ‘How does that, yes, impact the relationships, but what does it mean to us as a business?’ Because some restaurant clients say, ’All right, I want to get the bill. I want to pay it right away. I don't want to have anything outstanding.’ But that may not be the right thing for them.
They may have terms with their vendors, may have more time to pay, or may need the cash flow in the business. When we start to forecast and plan, we understand when we can pay bills.
The cool thing about bill pay is that to take it from a tactical to a strategic task, we need to simplify and automate our processes. When we use a tool like MarginEdge Bill Pay, there are several things we accomplish.
One, we're tracking the bills at a more detailed level, so all the line items are monitored. We’re also tracking price changes. So all these items that you need to ensure you’re tracking, you can load into MarginEdge and see the fluctuations and changes in near real-time.
In reality, it's not just ‘When is the bill due?’ It's ‘What are the vendor payment terms? What is the current available cash that we have? What are we expecting in cash? What is the upcoming payroll? What is the sales tax payable?’
So what we do as the bookkeeper when we're trying to help clients understand the bill pay process is give them a cash position. So, this is what you have in the bank. This is what you have coming. This is what you have going out, and these are the bills that are due, and these are the terms. This is what we have to pay now. This is what could be paid later.
We make bill pay a strategic play, and not just ‘I want to pay the bills.’
When you have the right tools, the right people using the tools, and the right accounting team, you're able to take it to that next level and be proactive and understand your business in more detail. And look, vendors want to get paid. When you communicate and are clear about what your expectations are and what you can and cannot do, then you're building a relationship and it's not just transactional. You're building a partnership.”
“To spot trends in restaurant finances, you have to look beyond the month-end P&L. A P&L gives you a snapshot, but restaurant trends are more current, active and proactive than that.
You want to catch changes as they happen, especially in food costs, labor costs, sales trends and cash flow.
For example, if the cost of produce or other goods starts fluctuating, that’s a trend you want to see right away, not weeks later. The same goes for things like average guest check, overtime, beer, liquor and wine costs. If the average guest check is going down, that may point to a training opportunity around upselling appetizers, desserts or coffee.
It’s also not just about catching problems, but understanding what’s working. If you had a great week with low food cost, do you know why? Because if you do, you can repeat it.
That’s why weekly reporting matters so much. If you wait until month-end, you’ve already lost four weeks of opportunity to fix the issue, and by then, you may not even be dealing with the same problem anymore.
At the end of the day, strong operators know their business and know their numbers. That’s how you move from guessing to informed decision-making, and from good to great.”
“Accounting is still accounting, but multi-unit operations are much more complex because you’re managing more than one business, more than one team and more than one set of processes.
With a single unit, you’re usually there every day. You can see what’s happening and catch issues quickly. With multi-units, you need visibility without being in the restaurant, which means process and consistency become everything.”
“My advice is simple: perfect it in one, then replicate it across the others. Standardize how bills are entered, how inventory is done, how recipes are tracked, how invoices are approved, how the chart of accounts is structured and how month-end gets closed. You also need to standardize the KPIs and dashboards you’re using so every unit is being measured the same way.
Just as important, your managers need to understand the numbers. They need to know the dashboards, the KPIs and what success looks like. If everyone isn’t speaking the same financial language, you’re not really comparing the same thing across locations.
That’s the biggest shift with multi-units: moving from direct oversight to process-driven visibility. And when you do that well, you can compare units, spot what’s working and scale it across the business.”
“My number one piece of advice for creating a more efficient back office is simple: standardize first, automate second.
You have to know what process you want before you automate it, because automating a broken process just gets you the wrong result faster. Software is powerful, but it doesn’t replace planning. It helps you make a good process faster, simpler, and more effective.
I see this all the time. Someone says they have MarginEdge, but they’re not loading recipes, not loading all their bills and not paying bills in the system. So it’s not just about having the tool. You have to actually use it.
That’s where the value is. Once you standardize the process and fully use the technology, you start getting better financials, better metrics and better decisions. And that’s really the future of accounting, using automation and technology to move beyond producing numbers and toward helping clients make smarter decisions.”
Restaurant accounting might not always be a walk in the park, but with the right tools, team and processes, it can be simplified, taking the stress off of both you and your employees.
When you start with the right budget, learn to adjust as needed, and leverage automated tools for sales forecasting, bill pay and more, you’ve got a setup that's sure to help keep your numbers in check. With the right tools, your back office will be a bigger hit than a seasonal ice cream flavor in the summertime. If you want to learn more about The Bookkeeper, and their bookkeeping for restaurants, check them out here. And watch our interview with Faysal below!