The hidden costs of inaccurate financial data in restaurants

There are plenty of times when guessing games are fun. Maybe you’re a Pictionary wiz, or a pro at knowing what your great-aunt got you for your birthday (socks again? You shouldn’t have!). But when it comes to the financial data of your restaurant, guessing games can lead to disaster. 

As a restaurant operator, you know the importance of understanding your restaurant’s finances. Financial literacy has a huge impact on every area of your business, from understanding everything from inventory and Prime Costs to scheduling and accounting. Unfortunately, financial literacy can only take you so far. Faulty or inaccurate financial data can make it tricky to understand your numbers, damaging your business, your reputation and your books. 

So what’s the real cost of inaccurate financial data in your restaurant (and what are the solutions)? 

Before we go over how inaccurate financial data may be costing your restaurant more than you think, let’s go over a few reasons why accuracy is so important when it comes to your restaurant’s finances. But don’t just take it from us, let’s take a look at some real-life scenarios and examples from a few restaurant owners on Reddit about why guessing games with your finances can have some pricey consequences. 

A few (avoidable) restaurateur scenarios caused by inaccurate financial data

"In over my head"

Inaccurate cost calculations can have expensive consequences. You probably already know the importance of having a plan and strategy for your restaurant’s finances and operations. But when your data is wonky, it’s impossible to plan when you don’t know what to look for. Avoid going in over your head or under- (or over) estimating costs by making accurate financial data one of your top priorities.

"I feel like we could be making more."

When it comes to scaling your business, accurate financial data plays a pretty important role, and inaccurate numbers can keep you stagnant. Whether you already have a 5-year plan for your business or are just starting out, proactive thinking is the key to expanding your business, increasing profits and reducing unnecessary expenses.

"I think we've been calculating incorrectly."

Poor calculations can have a trickle-down effect on your business and budget. When financial data isn’t accurate, you may be committing to payments you can’t really afford, not notice areas of improvement and be in the dark about where you truly stand financially. 

Now that we’ve gone over a few scenarios, let’s talk a little more in-depth about the real cost of inaccurate financial data and what that means for your restaurant. And don’t worry, we’ll go over some solutions, too.

Hidden costs of inaccurate financial data (and a few solutions)

1. Your money

Effective cash-flow management is an important part of being a restaurant operator. Knowing how much money is coming into and going out of your business is crucial for effective planning. Inaccurate data means you might over-staff on a slow night (costing you unnecessary labor dollars) or under-staff on a busy one (costing you sales and customer satisfaction).

Whether you’re pursuing more accurate staffing levels, more closely tracked food waste or better managed inventory, faulty numbers can mean you’re leaving money on the table. 

Our solution✨: Avoid manual errors by using restaurant tools that automatically import sales and purchasing data in one place. Track by category and compare year-over-year performance to budget effectively and keep cash flow management stress-free.

2. Your time

As a restaurant operator, there are a few things you can’t afford to waste: time and money. From our earlier Reddit examples, we know that inaccurate cost calculations can lead to wasted time. Luckily, we also know that improved financial accuracy leads to improved operational efficiency, saving you time and money (a win-win!). When your decisions are (accurately) data-driven, you can streamline things like putting in orders, quicker menu change decision-making and when to pay your vendors.

Our solution✨: To cut back even more on time, consider using sales forecasting tools to plan ahead. 

3. Your operations

Inaccurate financial data can cause hiccups in all kinds of areas of operation, from inventory and budgeting to bill payments and scheduling. Not only do bumpy operations slow you down, but they can also make for a poor experience for your customers. The truth is, your numbers have a trickle-down effect. According to USA Today, in a survey of 1,000 diners, 30% have left a restaurant before dining because of long wait times. When your operations slow down, so does your business. 

Our solution✨: Automate manual operations tasks, including financial tasks like vendor credit tracking and checking for plate cost changes. Spend less time with manual tasks and more time doing the things you love.

4. Your reputation

Inaccurate financial reporting can damage more than your bank account; it can harm your business’s relationships. Relationships with lenders, investors and stakeholders can quickly go haywire if financial data is not up-to-date and accurate. If your financial data isn’t adding up, it can potentially trigger a financial audit, which can also damage the relationships you’ve attached to your business if it doesn’t go well. 

Our solution✨: Use RMS accounting integrations to get sales journals, bill payments, invoice expense data and inventory adjustments automatically sent to your accounting system daily. No more worries about manual errors causing money hiccups or damaging your business’s reputation.

Stop letting inaccurate financial data put a (potato) wedge between you and your restaurant’s goals. By using the right tools, automating previously manual processes and troubleshooting errors, you’re well on your way to improving the financial health of your business. Bad financial data can cost you time, money and unnecessary stress, but with the right systems in place, you can save the guessing for Family Feud rewatches, not your finances.