small business

A Payroll Guide for Restaurant Owners


A thriving restaurant operates like a finely-tuned machine. Each employee carries out their specific tasks to keep the entire operation moving forward at a steady pace.

As a restaurant owner, you need to make sure you’re fully staffed so all the cogs in your machine keep moving. Depending on your restaurant, you might need to employ quite a few cooks, dishwashers, servers, bussers, bartenders, and other positions. And each employee will likely work different hours at varying pay rates, making payroll difficult.

In this blog post, we’ll provide tips for efficiently managing payroll in your restaurant.

You withhold and pay taxes for your employees

Withhold and paying taxes on behalf of your employees is one of your main responsibilities as an employer. Each new hire needs to complete the correct paperwork before they start so you can determine the right amount of taxes to withhold. As they work and earn income, you’ll need to collect their taxes and keep on-going and accurate records.

Tips are taxable income

While all businesses need to keep accurate employee tax records, it can be more difficult for restaurants since tips are considered taxable income. Your wait staff and bartenders need to declare what they earn in gratuities so none of their income goes unaccounted for.  

It’s good practice to have a straight-forward policy on how tips are managed in your restaurant. You can brief your staff members on the policy when they’re hired so they’re clear of the expectations from then on. You can learn more about how to manage and account for tips in your restaurant in this blog post.

Keeping the right employment records

You’ll find that keeping the right records on each employee makes managing payroll much easier. The forms they complete when hired, the amount in tips they report, and records for each pay run can all be stored in the cloud. Cloud document storage keeps your office free of clutter and makes it easy to find and access the right documents when you need them. When it comes time to file your taxes, you’ll be able to easily find the information you need instead of digging deep into a filing cabinet.

Use cloud payroll software

One of the best ways to simplify your payroll responsibilities is to implement cloud payroll software. Different cloud-based systems are able to connect and share data, automating many of your back office responsibilities.

In the case of payroll, each employee can enter their hours and the tips they earned into the system. The software will automatically arrange for each employee to be paid and update your staff and accounting records.

Does your restaurant need help managing payroll or implementing cloud payroll software? BookKeeping Express (BKE) can help!

How to Set the Right Menu Prices in Your Restaurant


The general principle for running a profitable business is simple. Generate more revenue than you pay out in expenses. This can be accomplished by charging the correct amount for the goods or services your business offers.

However, if you own a restaurant, you know how difficult setting prices can be. Your goal is to provide customers with delicious food and a great experience but you also need to make sure every item on your menu helps recoup your operating costs and then some.

Setting just the right menu prices boils down to having a thorough grasp of your costs and understanding how customers perceive your restaurant.

Food Costs

Food costs are the total costs of each ingredient used to prepare a menu item. It includes everything from the main ingredient to minor items like seasoning, garnishes, and cooking oil.

To calculate food costs, you need to know the exact cost for each ingredient and follow a consistent recipe each time you prepare a dish. However, some food costs do fluctuate due to seasonality, availability, or other factors. Many restaurants use the highest possible ingredient cost when determining their prices or rotate menu items with seasons.

Once you have a solid understanding of each menu item’s total cost, you can start to work out the correct amount to charge. Food costs should be about 30-35 percent of your sales, depending on the type of restaurant you operate.

Other costs that factor into menu prices

Restaurants also incur a number of other costs that need to be covered by menu prices. Here are some common examples:

  • Labor costs – You need to account for the wages and benefits you pay your employees to prepare food, serve customers, and help operate your restaurant.

  • Preparation costs – Not all menu items take the same amount of time and effort. The ones that take more work merit a higher price.

  • Overhead expenses – Restaurants have a lot of overhead costs, such as rent, utilities, equipment, maintenance, marketing, and much more.

There will likely be other costs that are unique to your restaurant you’ll need to take into account. Just be sure you have insight into all your restaurant expenses, so nothing goes unaccounted for.

Determining your menu prices

Once you have all your costs worked out, you can finally set your menu prices.They’ll need to cover all your restaurant's costs and provide you with a profit. But you’re likely asking yourself how much of a profit is reasonable? You of course want to make as much money as possible but you don’t want to be labeled as an overpriced restaurant. Here are few factors to take into consideration:

  • What type of restaurant do you operate? – People expect a meal at a fine dining restaurant to be expensive and look for more value when eating at a fast-casual restaurant. Be sure that your menu prices align with your customer’s expectations.

  • What do your competitors charge? – Go around your community and see what similar restaurants are charging. It’s also an opportunity to learn what you can do better than your competitors so you can develop a loyal customer base.

  • What else makes your restaurant appealing? – Do you use local and organic ingredients? Are you located next to a famous landmark? Is there a beautiful view from your dining room? Is your restaurant historic or well-known? These small advantages that help attract customers allow you to have slightly higher menu prices.

Setting menu prices is a delicate balance and requires deep thought and cost analysis. But it’s an exercise that will set your restaurant up for long-term success so be sure to give your menu pricing the attention it deserves.

BookKeeping Express (BKE) can manage your restaurant’s books and give you insight into your expenses, revenue, and overall financial performance. Find out why so many restaurants love working with BKE.

Are You Ready to Expand Your Business?

When business is going well, expansion is the logical next step. You can increase revenue and grow your brand by opening additional locations.

But expansion can also be risky. There is no guarantee your new location will be as successful as the original. And it can put a hamper on your entire business if it suffers. This worry is often enough to prevent business owners who are ready to expand from taking the chance.

The key to successful expansion is to first consider if your business is truly ready. If you determine you are, you can then make more detailed plans. But you should first ask yourself the follow questions:

Are you accomplishing the goals in your business plan?

Your business plan is the first document you should consult when considering expansion since it should contain a detailed strategy for your first 3-5 years of operation.

Review the strategy you set at the onset of your business and ask yourself if you’ve been following the plan. If you’ve gone off the rails, it’s probably a sign there is still work to do before you open new units.

Your business plan should also have detailed financial projections, which you can compare against your business’s actually financial performance. If you’re surpassing your original goals, it’s a good sign that you might be ready to expand. But if you’re falling short or just barely meeting your targets, you should probably continue to focus on the current location.

Does your current location have too much business?

If your current location has more business than the space can handle, you should likely consider expanding to multiple units. Moving to a bigger space also makes sense but opening an additional location gives you the opportunity to maintain the success your business has already established.

While too much business sounds like a good thing, it can actually harm your business in the long run. Loyal customers might grow frustrated with long waits or a lack of attention. Spreading your business out across multiple units is often a good idea in that situation.

Do you have the money to open new units?

This question might sound obvious but don’t make the mistake of thinking launching a second location will be much less expensive than your first. Think back to when you opened your business. It likely took some time to establish and turn a profit.

Before you expand, you should project your start-up costs and make sure you’ll have the funds to pay for the expenses across all your locations. If you do decide to expand, creating a detailed budget will be very helpful.

Do you have the right people to help you grow?

No matter how hard you work, you can’t be in two places at once. You’re likely going to spend the majority of your time at your new location as it gets going, so you should make sure you have a solid team overseeing your original location.

Working with other supportive partners can also be very beneficial as you consider expansion. For example, an accountant or bookkeeper who serves multi-unit businesses can keep your records updated and provide financial reports that detail the performance of each location.

Are your books in order? See how BookKeeping Express (BKE) can support you when it’s time to expand your business.


Why Your Inventory Count Is So Important

By Lauren Crum  Email Lauren

Counting your inventory correctly is critical because it’s used to calculate one of the most important financial indicators for some types of business - Cost of Goods Sold (COGS). Specifically, the calculation of COGS is beginning inventory (what you already had) plus purchases during the period (what you bought new and added to the beginning inventory), less ending inventory (what you have left). So, you can see that if your inventory count is incorrect, your COGS won't be accurate either! In some businesses, COGS accounts for one third of the total business expenses, so it is important to have a good handle on these costs. In addition, monitoring your COGS is a good way to identify operational problems within your business.

The first step to monitoring your COGS is to create a target for COGS as a percentage of income. For restaurants, a target COGS percentage is often 30-35% of sales. If your COGS are significantly higher than your targeted percentage, you might want to look at your menu pricing. It is likely that you need to raise your prices to achieve the desired target. If your COGS is significantly lower than the estimate you had anticipated, you may want to find out  what others in your industry are seeing, review your books to make sure you are capturing all expenses appropriately and finally consider whether reducing prices would in fact increase revenue via a significant increase in overall sales.  

Once you are consistently able to meet your target, your business can be diligent in identifying meaningful changes to COGS. Increases in COGS could be due to many variables, including employee theft, incorrectly preparing product, or waste. The good news is that once you identify a problem, you can set up controls to minimize these losses. Some businesses are even able to set targets for specific categories of COGS. Using these fine tuned targets will allow you to easily and quickly find areas of concern. For instance, a restaurant might define their COGS as Food, Beverage, Paper and Liquor. Each category then holds a certain percentage of total Product COGS. When a particular category, such as paper products, consistently exceeds the expected percentage, the restaurant knows they need to pay closer attention to the use of these items or shop around for better priced paper products. Tracking liquor sales separately could even highlight when too many drinks are comped by the bartenders.

If you like, BKE can help you calculate your COGS and generate reports that help you monitor your business more closely. Just let us know if you’d like to chat.


More Invoicing Tips & Tricks

  By Mariah Venus       Email Mariah

Today I want to talk through invoicing features and some other important aspects of invoicing.

Great Invoicing Features

Most invoicing modules have pre-built tools to gain efficiency and consistency.  Some examples of these tools are listed below:

  • Recurring invoices - most invoicing add-ons and accounting software applications have a recurring feature for invoices.  Utilize this for clients for which you do regular recurring services or have a monthly contract with.  This automation will limit your need for data entry and give you back valuable time!
  • Copy or duplicate - often you may find yourself creating invoices with the same basic items and descriptors.  Most invoicing add-ons and accounting software applications have the ability to copy or duplicate a previously created invoice.  You can do this either for the same customer who often has the same needs or across customers with similar sales.
  • Items - you can create pre-detailed items that include all the applicable data (name, description, price) or even create generic items that have some of the common info -- and allow you to fill in the rest on individual invoices.  i.e. - you provide a service that changes slightly from client to client but is always charged at the same rate. Create a generic item called Services, provide a generic description with room for you to modify it later and leave the price section 0.00.  When it is time to create an invoice, use this item, fill in the blanks in description and update price according to the agreement with your client.   
  • Job costing or business expensing - many tools will actually allow you to associate specific costs or expenses directly with a customer, making it easier to track the items you need to charge your customers.


Invoicing should be done in accordance with your company policies and processes.  You will want to decide how, what, and when before services even begin.  Keeping your invoicing consistent will not only make the process easier for you, it will keep your clients happier!

Remember, just because you’ve been managing your invoicing the same way forever, doesn’t mean you can’t go back and change settings and modify policies to get things ship-shape now!



Finally, check, double check and triple check your invoices before sending them to clients.  Data errors, misspellings, bad grammar or punctuation and/or incorrect totals will cause your clients to lose faith in you and actually make it less likely they’ll pay you quickly.  Remember, your invoices are samples of your business advertising and branding, and you want your invoices to be perfect.  Not only that, but as the communiqué that gets you paid, you want the terms and details to be perfect.  


Make sure to check out my first Invoicing Tips & Tricks, too. Subscribe to our posts to get updates sent to your inbox, or check back frequently. 


Happy invoicing!

Invoicing Tips & Tricks From a Master Bookkeeper

 By Mariah Venus      Email Mariah


Your invoice is often either the first or last indication of your brand, depending on whether you bill before or after service. You should trademark your invoice in common with your business. Not only should it include your actual brand logo and contact details, but it should match your company image in tone, terminology and character. Most accounting software systems (such as Xero or QuickBooks) and invoicing tools (such as  FreshBooks or Harvest) have invoice templates that are modifiable to accomplish a great deal of business branding within your invoice templates and even have multiple options for templates. For instance you may want different invoice styles for recurring invoices versus one time sales.


The content of your invoice is vital to getting paid. It not only tells your client how much to pay you, but why, when and how. All the major items that should be included in content are listed below:

  • Client details - client name, contact info and details about project or job - these will often auto feed from your accounting software,  or specialized invoicing tool providing the data is complete and the template includes it.
  • Services, items, fees and taxes - most invoicing modules will allow you to create "items" with pre-entered descriptions, prices and mapping to specific types of income.  This can be very valuable and time saving if you offer specific services, items and charge scheduled fees.  Use quantities and different items to really give your clients details about what you have charged them.  Make sure to use terminology that is clear to your client and in line with your business brand.
  • Terms - be sure to include not only the date of service and invoicing, but also the terms for payment so that the client knows when to pay you!
  • How to pay - the easier it is to pay you, the faster the client is likely to pay.   
  • Invoice number - this is really valuable information to both you and your client. It provides much needed tracking information to make sure you get paid, and so they can make sure they have paid you!  Be sure to use a number system that makes sense to you and is easy to incorporate into your accounting software or invoicing system.  Most invoicing systems will auto create invoicing numbers but are somewhat modifiable in the number format.
  • Notes - An invoice is a great opportunity to tell your client  that you appreciate their business, encourage them to give feedback -- or even notify them of upcoming sales, events or changes. In actuality, you can make your invoicing solution a promotional tool!

We'll have more invoicing tips and tricks to share next week! Subscribe to our posts to get updates sent to your inbox, or check back frequently.