Restaurant Owners Accounting San Diego Service, Issues & Challenges

Restaurant Owners Accounting San Diego Service, Issues & Challenges


What we’ll focused on today then is the challenges
that restaurant owners have from an accountancy point of view.
I’ll just take a new client that we started working with eight months ago that has a restaurant
that’s called the Flame Broiler. They have a franchise operation and they serve chicken
and rice bowls and things like that. They came to us about eight months ago and he had
partnered with his brother. Decided to buy a franchise. Took him about eight months to
do the build out at the location. He record keeping was pretty poor in the beginning.
They did not have an accounting system setup. So they’re spending all this money on lease
hold improvements and architects. And spending money on credit cards instead of…
The first challenge that they run into was just tracking all this. When it came time
to actually set up the bookkeeping and do the tax returns, had to track the stuff down
and it was fairly difficult for him to do that as he did not have a good accounting
system in place when he started. That was one thing. So eventually just used an Excel
spreadsheet to track the income and expenses. It wasn’t really the proper way to do in terms
of double entry accounting and keeping the books in order to do a tax return. What we
had to do with him was do a cleanup project. So we took the last 18 months of data from
him of all his transactions, historical bank statements, credit cards, and basically just
recreated the books for his last year and a half. So that was kind of our first step.
We did all that so we could essentially do the tax return for him. And then going forward
we were doing monthly bookkeeping with him. So he was using Spreadsheets. What did you
move into from that? We moved into QuickBooks Online. That was
the accounting solution. But did that mean that he had to become familiar
with QuickBooks Online? He doesn’t. He just uses it to lookup the
financial reports. You know, he looks at his profit-loss balance sheet. General ledger.
So he kind of just uses it only for financial reporting. We use it more for the internal
accounting in terms of the bank recs and things like that. Still uses Excel Spreadsheets for
some of its own internal tracking but now we have a good kind of financial system in
place, and so we can really understand if he’s making money or not.
How does he provide the data to you, so that you can put it into QuickBooks?
There’s kind of three components to that. So there’s the bank transactions. Most of
our clients we have them setup a view only access account to account for us with this
bank, so we can pull the bank statements, view the transactions, and also view his credit
card activities. So that’s how we get the information initially. And then the bookkeepers
will input that and reconcile that in QuickBooks. And then typically we will use historical
transactions in terms of our coding. So there’s something, a new vendor that pops up and our
bookkeeper aren’t familiar with that vendor is. We’ll send them an email asking them for
clarification as to what type of expenses it’s for.
Is he using a separate card for business? So therefore you know everything that goes
on in that card is business? Yeah. That’s what he does. And that’s one
of our best practice that we get clients to do, so we can ascertain that everything on
his card is business unless he tells otherwise. That’s the kind of the first step of the process.
Right. The other things that he provides to us he
has payroll, so he provides payroll reports to us, sets up online access. I believe he
has ADP. So we have an accountant access we can look at, so we can just pull those reports
and put the information in to the QuickBooks, because the proper breakdown of the payroll
expenses. And then the third component is the point of sales system, so he uses a POS
system. And that produces weekly and monthly reports. So then we can do a journal entry
in QuickBooks to make sure everything’s broken out correctly. Showing that we have gross
sales, we have refunds. Showing up in the right place. Do we have sales tax being reported
correctly? So that’s kind of what the POS reports supplies us with. And then it also
helps kind of reconcile things out in terms of cash deposits, credit card deposits right.
Because all this money coming into his account but the POS reports is actually a tool that
we can use to actually reconcile his account again. That’s another reason to have that.
And that’s one of the things that’s unique about restaurants is majority of them will
have some sort of point of sales systems, and so we’ll typically need reports from that,
in order to complete the accounting. One of the challenges that a lot of restaurants have
when they’re setting those reports up correctly. And usually they’ll need help from the vendor
to make sure that everything’s set up correctly. Because when they do it themselves, it might
not be setup the right way. Things might not go into the right categories. Usually there’s
some learning for them on that. We typically work with our clients just to make sure it
is providing us with the data we need. And if it isn’t then we’ll let them know that
they need to go back to their render and get it set up properly.
So how would you characterize that particular engagement?
Really for him, it’s more of some kind of a basic level of accounting, some kind of
monthly write up service. Providing monthly financial statements for him.
But the sense I get is that his QuickBooks activity in his case is completely outsourcing
to you. He’s not doing any work on QuickBooks other than just looking at the data. Did I
understand that correct? Right. That’s correct.
So it’s fully outsourced in the sense that he’s not having to do any work on QuickBooks.
Is that… Am I understanding it? Yeah.
Is that the most common way that people do it? Do most restaurants usually have their
own person handling QuickBooks? Or would most of them tend to outsource it?
It’s really a mix, Do you have an opinion of what tends to work
best? It can make sense if they manage it internally
if someone’s really dedicated to that task and they have the time. Probably a part time,
20-hour a week job. For someone who’s really in a restaurant to really take on that full
responsibility in the accounting department, they need to be a numbers type of person or
inclined to that. Otherwise, they create a mess for themselves.
Can you tell us more about that particular kind? Flame Broiler.
It’s a quick serve restaurant. People go in there and spend eight or ten bucks on a meal.
Lunch and dinner is mainly what they focus on. They’re on Pacific Beach, so they’re right
on kind of a main street through town. A lot of their businesses from locals, but they
do get some vacation traffic as well. The locals are their bread and butter. It tends
to be a little bit healthier to sell to people that are local who want to have a healthy
choice they can come back to on a consistent basis.
Without giving anything confidential away, can you ballpark what revenue level they’re
at? Let’s say a million and under.
So it is possible to run a restaurant and make a profit then, is it?
Is it possible? It is possible! A lot of them don’t though. The people that I see that make
it work are people that are typically experienced in the business, have a really good sense
of the numbers. Because a lot of it’s testing too, right? Because a lot of restaurant people
aren’t necessary numbers people. They’re food people. So they like to cook and everything
like that. They’re like the people aspect, but they’re not necessarily business people.
And sometimes that gets them into trouble. Not really watching the numbers the way they
should be. Or being overly optimistic or be emotionally attached to the idea.
I mention it because restaurants by nature are notoriously a run for a few months and
fail within the first year fairly consistently. It’s only some restaurants that seem to be
able to go from strength to strength. Yeah? Yeah. That’s true. It’s one of those businesses
where have to manage it well. You have to manage every dollar. Costs are really important
in that type of business. Yeah.

One thought on “Restaurant Owners Accounting San Diego Service, Issues & Challenges

  1. Hi, I am a service executive at cogneesol… I found your points very useful. So, should be considered by any restaurant owner to outsourcing their accounting and bookkeeping services by a business outsourcing company instead of doing by themselves.

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