Tip pooling is the practice of collecting all tips for the day and dividing them among working employees according to a formula. The formula can be as simple as an even division among all workers. Another popular formula is to weigh the tips by position in the restaurant according to a point system. 

There are laws regulating tip pooling, which vary by state. Legally, tip pooling is distinct from tip sharing. Tip sharing is a voluntary arrangement created by employees for the division of tips, while tip pooling is a company policy. Tip pooling can be extended to include non-tipped employees if tipped employees are paid the full minimum wage.

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Purpose of Tip Pooling Calculator

A tip pooling calculator (or tip splitting calculator) allows you to consistently apply the same formula to your tip division, increasing consistency and fairness while reducing effort. The exact formula applied by the calculator can be customized to your needs. You can choose to use a point formula that assigns more tips to servers and less to bussers (for example, imagine servers get 20 points while bussers get 10) or you can divide tips evenly among workers. As a manager, using a tip calculator saves you time and creates a repeatable process you can easily explain to employees who want to understand how they get tipped.

Benefits of Using a Tip Pooling Calculator

Using a tip share calculator creates a simple procedure that you’ll follow every time. You input the data, and the calculator does the rest. This saves time and puts an end to manual number crunching. Another benefit of a tip calculator is its accuracy: tips are calculated according to the same formula each time, based on clear data. Your employees will appreciate the fairness of this method. And if they ask how tips are divided, you’ll have a tool to show them, increasing transparency. Finally, using a tip calculator reduces your compliance risks, as the calculator is designed to meet the legal requirements around tip pooling. 

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Tips for Effective Tip Pooling Management

Successful tip pooling requires clear communication with employees on how the process works and why it is designed that way. The more transparent you can be with staff, the more trust they’ll have in the process. Trust leads to employee buy-in, meaning you’ll get less objections to your tip distribution calculator. It’s important to periodically examine your tip pooling process and evaluate whether it’s achieving the outcomes you designed it for. Are your employees feeling valued? Are the points being fairly allocated? Ask for feedback from your staff, and if it’s relevant, try to take it into account. A solid tip pooling procedure is a valuable business asset, one that pays dividends in a happy and hard working staff.

RELATED: How to Record Tips in Accounting

The post Tip Pooling Calculator: Streamlining Fair Distribution of Tips appeared first on Restaurant Accounting Services, Inc..

Restaurant tips have their share of mystery surrounding them – but they don’t have to! Since tips are an extra type of payment to servers, bartenders, and other restaurant staff, they’re often regarded as under-the-table income.

But that’s the first mistake usually made when calculating tips. Tips are considered taxable income to the recipient, and must be accounted for accordingly.

Plenty of questions pop up about restaurant tips, including:

• Are tips calculated differently than regular hourly income?
• Are credit card tips taxed on paychecks?
• Do employers pay taxes on tips?
• And many more

RASI, the leader in restaurant accounting software, is here to set the record straight on restaurant tips. Make sure you check out our in-depth article on restaurant tips for helpful info. Let’s get into some specifics to help you fully understand tips!

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Requirements for Tip Recipients

Here are the three golden rules for any restaurant employee who receives tips:

• Keep a running log of all restaurant tips – daily records are recommended.
• For any month that exceeds $20 in tips, report all cash and credit card tips to restaurant management.
• Report all tip income (including regular income) to the IRS – this ensures the proper tax amount is withheld.

Withholding & Reporting: Requirements for Employers

Employers also have their share of responsibilities. Do employers pay taxes on tips? What about FICA taxes? To ensure IRS compliant withholding requirements, employers should always track:

• Cash and credit card tips for all staff.
• Restaurant tips split between employees – also known as “tip pooling.”
• Monetary value of all non-cash tips.
• Withholding income and Federal Insurance Contributions Act (FICA) taxes on all employee wages – regular income and tips.

In order to account for employee income, it helps if your restaurant has a financial reporting system, which is one of RASI’s core offerings.

What Happens If Employee Taxes Aren’t Paid on Restaurant Tips?

For employees, it’s required by law to pay taxes on all types of restaurant tips (credit card, cash, non-monetary tips). Failure to report and pay could result in a penalty equal to 50% of the FICA taxes on unreported tips. There are circumstances with reasonable cause to show why the taxes weren’t reported to the employer, but it’s best to report everything, all the time – this goes back to keeping regular, accurate tip logs.

Consequences of Failing to Report Taxes for Restaurant Tips — Employers

If employers are always properly closing out financial periods – which includes restaurant tips – they can avoid all the headaches involved with non-compliance.

You might be unaware, but every March, large food & beverage establishments are required to report income from the prior year. This includes all food & beverage consumption, tips, and other information. This is called the Employer’s Annual Information Return of Tip Income and Allocated Tips.  

Given the laws and regulations related to restaurant tips, it’s important for employers and employees to pay taxes on all tips, whether cash, credit card, or non-monetary tips (equivalent cash value).

It’s so important, in fact, that a 2002 U.S Supreme Court case, U.S. v. Fior D’Italia, established the guidelines for tip reporting. In this case, the IRS concluded that cash tip income was considerably under-valued than charge tip income. Bottom line: the restaurant in this case was required to pay the difference. The Supreme Court upheld the IRS findings, something now known as the aggregate estimation method.

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Sign Up with RASI Today!

That’s why your restaurant should have a compliant, accurate, easy-to-use Payroll Reporting system in place. RASI provides this and much more – don’t take chances with the IRS for under-reporting taxes due on restaurant tips. Request a free demo today, or call our experts directly at (720) 826-9900. Thanks for considering RASI for your total restaurant accounting solutions!

The post What Restaurant Owners/Managers Should Know About Tips appeared first on Restaurant Accounting Services, Inc..

Every well run organization starts at the top. Sometimes, managers are brought in from another restaurant. And more often than you think, regular employees are promoted to manager.

But which restaurant management skills separate the good leaders from the great ones? What’s more critical – organization or people skills? And what tools or resources can help enhance the most important restaurant manager skills?

RASI can assist with honing and improving restaurant management skills – particularly in the field of full-service accounting applications and other business-friendly tools. We’re here to help any restaurant manager round out their skill set with the best support structure around. Let’s look at some common restaurant manager attributes and skills, how to refine the skills needed for a restaurant manager, and more!

Essential Attributes of a Great Restaurant Manager

Here’s a handful of characteristics every manager needs – learn and master these, and you’re on your way to perfecting all the skills needed for a restaurant manager!

1. Decisiveness. From deciding on the right supplier to making the latest shift schedules, all restaurant managers need to be decisive – yet fair at the same time. “The buck stops here” is a quality all effective leaders share, and a restaurant manager is no different.
   
2. Flexibility. Nothing ever stays still in the restaurant industry. Unexpected lunch and dinner rushes, prompt call-offs, challenging supply issues – you name it, restaurant managers deal with it. The ability to adjust on the fly, all while remaining calm in the center of the storm, defines all the best managers.
3. Professionalism. Everyone in the restaurant looks up to the manager. By having an aura of professionalism and authority, it’s easier to handle day-to-day responsibilities. Lead effectively, and your employees will follow.
4. Empathy. Don’t let professionalism take away the human touch. From disgruntled employees to angry customers, it always helps to empathize with a particular point of view. Empathy helps with conflict resolution, inspiring your team, and much more!
5. Honesty. Be a straight shooter – with employees and customers. Act with integrity at all times, whether you’re managing the books or working on employee relationships.

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Critical Restaurant Management Skills

An effective restaurant manager is the ultimate jack of all trades. Like a time-honored recipe, or your menu’s most popular item, it takes the right ingredients to make it work. Applying those skills to everyday management tasks is a good start. Here are just some of the things a manager is responsible for:

• Labor management – including payroll, shift scheduling, and the like. And don’t forget retaining the top talent!
• Ensuring a smooth supply chain – even the best customer service won’t fix a kitchen without the tools to succeed.
• Menu costing and control
• Inventory management
• Customer service – handling complaints, PR, etc.
• Compliance – all managers set the tone with integrity. This is critical, especially with ever-changing compliance laws & regulations.
• Handle the books – P&L statements, data analysis, cash management and more.

Building a Support System for Restaurant Management Skills

Aside from hiring the right people, the skills needed for a restaurant manager don’t stop with human interaction. It helps to have a complete support system in place for things like POS integration, data analytics, accounting, payroll and more. The bad news? There’s no single master class to master all of these areas at once.

The good news? RASI empowers restaurant managers with everything necessary to help round out any management skill set! One of our core focal points is to ensure that our clients have access to the best education possible to learn operational and accounting best practices that allow you to set attainable and realistic goals, tactics, and measurements for your teams. Like every capable restaurant manager, our services are also flexible, adaptable, and people-friendly!

LISTEN TO THE FULL PODCAST EPISODE BELOW!

Request a demo today, or contact us to learn more! We’re here to help any restaurant manager win with the absolute best accounting platform you’ll find anywhere. 

The post 5 Important Restaurant Management Skills appeared first on Restaurant Accounting Services, Inc..

Getting a restaurant up and running is a challenge. Keeping a single establishment or franchise profitable over months and years is even more so. What separates the restaurants that quickly fail from those that have been established for an extended period?

Sales & Expenses
Point-of-sale (POS) Transactions
Financial Reporting
Accounts Payable & Cash Management
Taxes & Compliance
Inventory Management
Restaurant Accounting Formulas
Accounting Cycle
Payroll Processing for Accounting
Getting Started

You could argue – and we’d certainly agree – that taking advantage of a restaurant accounting software and service is the most significant single factor determining long-term success. As the leader in automated, expert accounting for the restaurant industry, RASI has put together an ultimate guide on restaurant accounting as an educational resource for you:

• Understanding the different types of accounting for restaurants
• Key factors to consider in restaurant accounting
• Determining efficient methods for cost analysis, accounting cycles, and more
• Grasping the importance of payroll for accounting in the restaurant industry
• And much more

With comprehensive and best-in-class restaurant accounting services, RASI can help any sized restaurant – from small, single eateries to nationwide franchises – make their accounting system work for them

Accounting in the restaurant industry generally falls into one of three categories:

• Software-based accounting system.
• Internal accounting practices – Controlled by a restaurant’s management team or financial personnel.
• Tech-enabled, cloud-based platforms – RASI’s restaurant accounting platform combines the best qualities of the first two methods. We offer our restaurants complete control using streamlined software paired with the expertise of compliant, continually updated accounting tools, resources, and a team providing continued education to ensure financial goals are met.

Before deciding which route to take with the accounting for your restaurants, you should determine your restaurant’s specific goals, factor in budgetary considerations (how much you’re willing to spend), and see if a 3rd-party solution is a good fit.

Let’s dive into the first important step – factors to consider when setting up your restaurant’s accounting system!

Accounting for Restaurants: Key Factors to Consider

Let’s lay the foundation for accounting in the restaurant industry; the following factors are essential for any operator to understand restaurant accounting. If you can grasp these ideas, it’ll make your decision that much easier for outsourcing!

Sales & Expenses: 

The two fundamental elements of any budget, sales, and expenses, ultimately help determine if your restaurant is profitable. Sales include food & merchandise sales, reward program revenue, and other similar transactions. Expenses, meanwhile, encompass any costs associated with running your restaurant: food, labor, taxes, accounts payable, rent, etc.

Point-of-sale (POS) Transactions:

POS transactions are recorded at the exact time and place they occur. These types of restaurant accounting transactions add up quickly, and it helps to have a POS integration system for any establishment with multiple locations, a merchandise portal, and other revenue streams that stream directly into your accounting system.

Financial Reporting:

Hitting your operational targets and creating a precise budget is paramount for success in the restaurant industry. This is only possible through streamlined financial reporting that spits out real-time data for operators to make timely business decisions based on facts and numbers.

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Accounts Payable & Cash Management:

What’s the current situation of your restaurant’s cash on hand? How about money coming in from accounts receivable or money going out for accounts payable? Increasing timeliness and accuracy surrounding your Accounts Payable helps you proactively manage your accounts payable and cash position. Figuring out how to track cash management is one of the more overlooked aspects of restaurant accounting; you should always have complete visibility into your cash flow to make more educated business decisions.

Taxes & Compliance:

You can’t forget about Uncle Sam here. When performing accounting for restaurants, it’s critical to factor in taxes and compliance. This category includes everything from wage garnishment to payroll tax returns to 401(k) reporting to industry legislation and regulations. Forgetting these factors can mean crippling penalties and fees in an already low-margin business.

Inventory Management:

Every chef strives to optimize their menu, but many don’t know where to begin. The basis for all effective menus begins with proper inventory management. Understanding the correlation between menu items and contributed sales, proper purchasing habits, and how inventory all affect the successful management of COGS can be overwhelming without a restaurant accounting platform that addresses each of these areas.

Restaurant Accounting Formulas:

For the diehard financial analysts and accounting geeks out there, the importance of knowing basic and advanced accounting formulas is hard to overstate. Check out our comprehensive formulas page for accounting in the restaurant industry – tons of helpful information in there!

The Accounting Cycle: Focus on Frequency

Regardless of what type of accounting for your restaurants you ultimately decide, here’s a recommendation on the most successful accounting cycle: weekly works best!

Some restaurants prefer to work on monthly accounting cycles, but we recommend the methodology of comparing apples to apples rather than apples to oranges. What does this mean? A monthly accounting system is an apple-to-oranges approach. The number of days within each month varies; each month begins and ends on a different day.

Within a thirteen 4-week period, or a 4-4-5 accounting cycle (for each quarter, the first financial period is the first four weeks, the second period is the following four weeks, and the third period is the final five weeks), you’re ensuring all your data is streamlined to compare apples to apples because you’ve consolidated your months/days into very specific periods.

Additionally, we recommend an across-the-board method of weekly restaurant accounting reviews for all your data so that all your revenue, costs, expenses, payroll, and other reporting is consistent every week, every year, for all your restaurants… apples to apples!

The Importance of Payroll Processing for Accounting in the Restaurant Industry

Transforming payroll processing from a necessary function into a tactical, operational tool is one of the most underrated aspects of strategic restaurant accounting. Accurate, efficient reporting is a necessity to master this strategy. For larger restaurants and franchises, in particular, having a restaurant accounting system with a built-in payroll platform keeps all your data streamlined.

Additionally, the game has completely changed for operators paying their people properly when it comes to payroll compliance. RASI provides best-in-class payroll features with a dedicated team who understands and maintains restaurant industry compliance with Local, State, and Federal Mandates, including Tip Credit, PTO, Regular Rate of Pay, and Surcharge in all states!

Controlling labor costs in this new environment will require a more strategic, compliant-based approach – Can you identify, down to the shift, where you are losing money in comparison with sales and recognize specific job codes that need adjustments to make the most profitable impact when creating schedules? Utilizing an outsourced restaurant bookkeeping, accounting and payroll platform can provide all these actionable insights and more!

Getting Started with Accounting for Your Restaurants

OK, it’s time to implement a restaurant accounting system. Now that you have a basic understanding of the building blocks and foundational concepts that drive accounting in the restaurant industry, you might be wondering how to get things up and running.

RASI works with various point solutions to ensure your back office has the tools and resources to handle the unique challenges associated with restaurant accounting. With a well-rounded solution, you can manage labor compliance, benefits administrators, lenders, marketing solutions, and more!

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We’re here to help get your restaurant accounting off the ground whenever you’re ready! Whether starting from scratch or needing a wholesale change to your outdated platform, RASI offers the best solutions that align with any budget. To get started, request a demo or send us your questions today!

The post Restaurant Accounting: A Complete Guide appeared first on Restaurant Accounting Services, Inc..

Think of the multitude of processes your restaurant performs on a daily or weekly basis – Payroll. Payment processing. Vendor Payments. General accounting – and those are merely the tip of the proverbial iceberg.

Now, think about how seamless all these tasks would be with a streamlined, automated accounting system that integrates directly with your point of sale (POS) system. This connection would provide a centralized source of data to eliminate manual processes and significantly reduce or outright eliminate human errors (nothing personal against Nancy in accounting, we assure you). Moreover, it would increase your restaurant’s profitability through timely and accurate reporting and provide insights into greater areas of opportunity.

Integrated Accounting Systems and Payroll Processing

What is an integrated restaurant accounting software system, and how can it benefit your restaurant? An integrated accounting system is an accounting system that syncs with other types of software. In restaurants, these various integrations can range from point solutions like labor compliance, hiring and onboarding, marketing, and, most importantly, your POS System; This, in essence, creates your restaurant tech stack. 

All operators understand that the point of sale system holds your restaurant’s most critical information, like sales and labor data. An integrated POS system directly connects to your accounting software, and all that data is pulled directly into your accounting platform. The source data from your POS then disseminates where appropriate and ultimately posts to your financial statements. This streamlined connection provides the insights to complete financial clarity into your business. 

Let’s look at payroll processing as an example. Having an integrated system in accounting with auto-synced payroll data ensures:

• No exporting payroll files back and forth to reduce the chance of lost data
• Quick, accurate payroll reviews to ensure all employees are promptly paid
• All regulatory and compliance items are automatically accounted for (PTO, sick time, tip income, etc.)
• Elimination of errors due to manual data entry with payroll processing; everything is synchronized automatically

An integrated POS system syncing with your accounting software will save operators and their teams countless hours of data entry within payroll processing alone.  

Integrated POS Systems and Operational Reporting

Operators who utilize real-time data to better manage their cash flow and improve the precision of their budgets and operational targets will always perform at a high level than those who do not. However, this high-level performance is only possible through an integrated POS system that directly syncs to your accounting software. 

Integrated POS and accounting software offers the opportunity for operators to review operational KPIs and reporting covering labor, sales, and product, as well as Franchisor/Franchisee performance comparisons with exception-based reporting dependent upon tolerances. 

This quick, accurate, and streamlined data consumption process enables operators to become proactive instead of reactive. This is most transparent through operational reporting, where owners can make data-driven decisions in real-time that will positively affect their bottom line.

Sales Reporting

Consuming data directly from your POS into your accounting system enables operators to view sales information more readily. Operators can view performance metrics like sales in comparison to labor, revenue by dayparts, gift card sales, comps, discounts, promos, and more. With access to such granular information, operators can better forecast sales and stick to their budgets more closely.

Labor Reporting

Operators can control labor costs and optimize labor dollars through KPI tracking with POS data; this enables operators to schedule more efficiently based on actual business trends. Labor dollars can be controlled through received data like a daily flash report with overtime warnings, time and attendance details, server productivity, employee tip information, and more!

Menu Metrics

Pertinent menu information is available using integrated POS and accounting software. Operators can view top and bottom sellers, product mix data, sales in relation to contribution margin, and quickly identify and communicate unit recipe, vendor, and item discrepancies. With this rich data, operators can learn how to engineer their menus for profitability.

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Integrated POS Systems and Financial Reporting

An integrated POS system helps operators keep their fingers on the financial pulse of their restaurant utilizing real-time data to create actionable financial insights. Automated, weekly financial reports are readily available to ensure operators can make business decisions quickly and accurately. 

Single Unit Operators

Once your integrated POS and accounting software is up and running, all data subsets parse out into different types of reporting to provide custom snapshots of how your business is performing. This is especially important when you’re looking at the overall health of your business with the P&L, Balance Sheet, and Statement of Cash Flow.

Multi-Concept Operators

At an even more significant benefit, if an operator runs more than one unit, an integrated POS system will enable them to compare data performance with side-by-side financial reporting across multiple divisions. The operator can even drill down into meaningful KPIs within guest checks, inventory items, purchasing details, and general ledger distribution within this comprehensive reporting.

The Time to Integrate Was Yesterday – Get Moving on Your Integrated POS and Accounting Software Today!

RASI’s accounting software and POS integration offers unmatched protection, profitability, and simplicity for your complete restaurant financial needs.

• Protection – Our automated technology automatically accounts for regulatory and legislative updates.
• Profitability – Real-time reporting provides an accurate picture of your restaurant’s financial health, which assists in making profitable business decisions.
• Simplicity – Enjoy the benefits of no more manual data entry! Our accurate, error-free reporting offers custom balance sheets, chart of accounts, and more that are all automated and standardized for your business!

LISTEN TO THE FULL PODCAST EPISODE BELOW!

Check out RASI’s case studies to see the positive, proactive results we’ve achieved for some of our clients, including a Multi-Unit Franchisee client who experienced a 14% decrease in labor costs across all units. A significant reason for these significant savings? Timely and accurate financial reporting received with labor details synced from the POS to our integrated accounting software system in accounting! Our client made proactive, educated decisions based on actual data and comparative labor reporting with actionable intelligence on the labor front.

Click here to request a demo and discover all the benefits of our comprehensive accounting services for your restaurant! 

The post Why You Need to Integrate your POS System and Accounting Software appeared first on Restaurant Accounting Services, Inc..

One of the most critical metrics to understand and track as a restaurant operator is your restaurant profit margin. Simply put, to remain in business, you need to understand your margins and everything that goes into them. This seemingly simple metric contains a fair bit of complexity under the hood.

The formula to calculate restaurant profit margin is as follows:

[(Revenue – Expenses) / Sales] x 100

The formula above represents your revenue minus your expenses in a given period, divided by your sales for that period. To understand your profit as a percentage of sales, multiply that number by one hundred.

It’s important to know there are two classifications of profit margins; gross and net. The difference comes from how you calculate your expenses. Gross profit deducts only your Cost of Goods (COGS), while net profit subtracts every type of expense you have.

Let’s break down the components of the formula for Net Profit Margin:

• Revenue: Your revenue is the total of your restaurant’s income streams, such as Dining Room, Bar, catering, merchandise/retail, and banquets/venue rentals.
• Expenses: Your expenses is all the money going out the door, like rent, payroll, food and beverage costs, and equipment depreciation or leasing cost.
• Sales: Your sales are pretty self-explanatory – the sum value of everything your guests purchased.

Average restaurant profits across the industry

Average restaurant profits across the industry vary; the range typically falls between 2%-6%. There is also variance within the industry: full-service restaurants usually fall on the lower end of the spectrum, while quick-service restaurants and food trucks will cluster higher. Wherever you sit in the profit margin range, you’ll need to run a tight ship to turn a regular profit. This comes with proactively managing your overhead, labor, and costs of goods. The first step to reliable profits is having accurate sales and costs figures, which are made markedly more accessible by using modern restaurant accounting software.

Restaurant break-even points

When discussing restaurant profit margin, it’s critical to also look at break-evens. When discussing restaurant profit margin, it’s critical to also look at break-evens. Understanding break-even points is one of the most reliable guideposts a restaurant operator can have in guiding more substantial margins. Break-evens indicate how much in sales you need to meet your fixed and variable costs, and they help create more precise budgets and accurate sales forecasts, improving the bottom line.

Break-evens fall into two categories:

• • Cash flow break-even: A cash flow break-even factors in your restaurant profitability plus your debt servicing, government assistance, and anything else that does not show up on your P&L but needs to be factored into your cash management strategy.

• Operational break-even: An operational break-even helps determine at what point your sales meet your complete operational expenses. How much do you need to make in sales to live to fight another day? This type of break-even will assist you in determining budgets, goals, and operational directives.

TUNE IN AND WATCH THE FULL VIDEO ON RESTAURANT PROFIT MARGIN BELOW!

How to make a restaurant more profitable

There are two ways that operators can improve their bottom line.

• Increase revenue relative to expenses
• Decrease costs relative to sales

How to increase revenue relative to expenses

Offer great bar programs and strive for high table turnover

To increase revenue, focus on growing each of your primary revenue streams, typically Dining Room, Bar, Catering, Merchandise/Retail, and Banquets/Venue Rentals. Dining room and bar sales are usually the most significant contributors, so pay special attention to them. Firstly, looking at your bar, remember that margins on alcohol can reach 60%, making them by far the most profitable sales category. Lean into this advantage with appealing selections of wine, beer, and cocktails.

Your dining room profitability can be increased by making more money per customer or by increasing the number of customers served. For the latter goal, it’s key to establish a high table turnover rate. This means increasing the number of customers served in a given period by reducing the average time spent at tables.

Fast-casual restaurants have customers dine and dash at an advantageous pace. The more people you can serve over a given period of time, the higher your profit. A high turnover rate also compensates for limited real estate, allowing you to effectively fit more people in your space.

Engineer your menu and merchandise the menu items

You can also increase revenue by working with your chef to engineer a menu with more profitable dishes. Additionally, you can train your team to merchandise your menu items. Upselling, or merchandising your menu, is essentially training your team to understand menu items in relation to their contributing margins, just like engineering your menu is creating a menu that caters directly to contributing margins.

Drive repeat business

Driving repeat business is another time-tested strategy to increase sales. Your best customers are the ones you already have. They’ve already made the decision to patronize your business, so your customer acquisition cost (CAC) on repeat visits is near zero. Take advantage of that by cultivating a regular clientele. Positive word of mouth can be one of the most potent advertising tools you have, and as a bonus, it’s free! An additional way to create repeat business, especially if you’re a QSR, may be customized rewards programs that incentivize repeat purchases.

Master your online marketing

Lastly, in the age of the smartphone, having an online presence has gone from nice-to-have to need-to-have. Prospective customers will look for information about your restaurant online. They’ll want to see your menu, address, and hours of operation at a bare minimum. Have an up-to-date website and Google Business Profile listing. A well-managed website can become a business asset with multiple advantages, from digital marketing to online orders.

How to decrease costs revenue relative to sales

Know your metrics

Understanding your KPI’s (key performance indicators) is critical to cost savings for a restaurant operator. Without these clear and timely financial indicators, you’re flying blind and will be unable to take proactive steps to control costs. Receiving real-time updates on business-critical metrics will help guide your areas of opportunity to see where you can decrease costs. RASI’s business intelligence and data analytics empower our operators to take swift action on financial metrics, drill down into sales trends, and use machine learning to make accurate forecasts.

Control your prime costs (COGS & labor)

To decrease costs, you’ll need to get a handle on your principal cost drivers, i.e., your Prime Costs: labor and COGS. Prime costs can fluctuate greatly depending upon what’s happening around the globe. Commodity prices, staffing challenges, and consumer behavior can all affect your prime costs. Therefore, the more frequently you review your prime costs, the better. We recommend a weekly manager meeting to review P&Ls for this reason. If you consistently assess your data, you’ll be better equipped to make educated business decisions based on opportunities presented in your analyses. Here are 3 strategies to help control your prime costs:

• Review and forecast your labor to enable efficient staffing levels, then create your schedule accordingly. Additionally, another frequently overlooked cost savings method comes from payroll compliance. Substantial fees are levied on restaurants that don’t comply with the law on meal and rest breaks, overtime, and paid time off. These fees are easily avoided by conscientious management of your payroll.
• Take control of your inventory to reduce waste, theft, and spoilage, and optimize your menu to par dishes that don’t sell and create dishes with high perceived value (and built-in profit margins).
• Leverage relationships with your vendors to ensure you’re getting the best deals with constantly fluctuating prices or finding cost-effective sub-worthy items.

Review your financial statements regularly

Timely and accurate financials give operators the leverage needed to make necessary changes to their business. When you can view how your departments are performing relative to budget, how your sales are trending, and have the knowledge and understanding to forecast your primary cost directives accurately, you’re empowered to drive positive, consistent financial results. Every operator must become intimately familiar with their Profit and Loss Statement, Balance Sheet, and Statement of Cash Flow. Each of these measures is distinct, and each contributes a unique perspective on the overall health of your restaurant.

Other Ways to Make Money for Your Restaurant

Aside from obvious things like tracking profit margins, cash flow break-even analysis, and other accounting equations, there are a few creative ways to make extra money, even while handling the regular day-to-day tasks of running your restaurant.

1. Master the art of the upsell. Your customers are in your restaurant for a reason, and that’s especially true of your repeat, loyal patrons. We recommend you take a multi-level approach to upselling your restaurant’s extra products and services.

For example, servers handle the dining area to offer customers extra portions, exclusive sales, and the like.

Keep in mind, only the best-trained staff are equipped to deliver results with upselling appetizers, desserts, and specials – a great personality can only take you so far, if the requisite menu knowledge isn’t there.

Same goes true for the other “level” of your upsell platform (if you have one): the bar area. Alcohol upsells are a great way to increase profit with relative ease. Happy hours, seasonal cocktail specials and similar promos are tailor-made for your bar staff to upsell timely offers for bar patrons.

Make sure your staff prioritizes high-velocity, low-cost items to maximize profit. During special promos, serving staff should greet each table with a quick rundown of your restaurant’s current specials, with a particular emphasis on those top-selling menu items. Same goes for your bar staff; make sure you coach bartenders and other personnel to always mention drink specials, happy hour prices, and more.

2. Market your merch. And if you don’t already have a baseline of clothing and accessories, maybe it’s a great time to launch your own merchandise! Sure, there’s some up-front costs involved, but a well-promoted campaign will quickly dial up the profits.

If you already have t-shirts and hats, maybe try bottle openers and other small accessories to create another revenue stream. For any merchandise line, a certain degree of creativity is an absolute must! For example, merch is a great way to come up with a new slogan or tagline for your restaurant.

3. Create friendly competition. A great way to boost revenue is to have employee “contests,” with rewards for top-selling staff. As we mentioned above, promoting top-selling items aligns perfectly with periodic sales drives.

Gift cards, extra vacation and bonus pay are just a few ways to incentivize top-performing employees. It’s a win-win situation; they reap individual rewards, while your restaurant collectively makes more money.

4. Elevate your social media presence. It’s not necessary to become a worldwide-famous TikTok influencer to reap the benefits of an active social media account. Your customers (and potential customers) already know what they’re searching for, so just having something to say, whether it’s your latest special or an exclusive promo, is a good way to drive extra business to your establishment.

The best way to increase revenue with any social media app (Facebook, Instagram, Snapchat, etc.) is to create regular, topical content focused on what people would want to know…special deals, hours, location, you name it. Another tip: encourage your guests to leave positive reviews, as this definitely helps bring new customers through the door.

LISTEN TO OUR RESTAURANT PROFIT MARGIN PODCAST EPISODE BELOW!

Ready to get in the driver’s seat of your restaurant? Contact us for a free demo!

The post How Do Small Business Restaurants Make a Profit? appeared first on Restaurant Accounting Services, Inc..

The Background on Payroll Compliance – What are some Current Issues?

Issue #1) Meal & Rest Period Requirements

Federal versus State Laws are entirely different regarding Meal & Rest Period Requirements. The variances in legislation confuse operators as they’re unsure which laws they need to follow. The penalties are hefty, and fines can range upwards of $1,000 per instance if an operator is not compliant. The penalties can add up quickly and cripple a business. California restaurants are at high risk of Meal & Rest Break compliance penalties because the state makes it easy for an employee to take action against an employer. Below we’ll review a few differences between Federal and State Laws within Meal & Rest Breaks.

Federal Law: Meal & Rest Compliance — Federal Law, does not require rest or meal periods

• • However, when employers offer short breaks (usually lasting about 5 to 20 minutes), federal law considers the breaks as compensable work hours. These hours should be included in the sum of hours worked during the workweek and considered in determining if overtime was worked
  • Meal periods (typically lasting at least 30 minutes) serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable

State Law: Meal & Rest Compliance — Most states have Meal and Rest Period requirements for employees working shifts of certain lengths (AZ, ID, KS are a few of the only states that do not have Meal and Rest Period requirements)

• • A meal period is typically 30-minutes
    • A meal is usually due to employees after working 5-6 hours in a shift
    • If an employee is relieved from all duties, the 30-minute meal period can be unpaid
    • If an employee is not relieved from all duties, the entire break must be paid
    • An unpaid meal period does not count towards identifying whether an employee has worked enough hours to trigger overtime pay
      • This is because meal periods are generally uncompensated and do not count as time worked
    • When the nature of the business or other circumstances make an uninterrupted meal period impractical, employees are to be allowed to consume an on-duty meal while performing duties and be fully compensated for the on-duty meal period
      • Employees must be fully compensated for any on-duty meal period
  • A rest period is typically 10-minutes
    • A break is usually due to employees after working 2-3 hours in a shift
    • During the break, employees must be relieved from all duties
    • The rest period is paid whether relieved of all duties or not
    • Required rest periods are time worked for purposes of calculating minimum wage and overtime requirements

Issue #2)  Predictive Scheduling Laws

Predictive Scheduling Laws are popping up across the nation. They’re incredibly complex and have created mass amounts of confusion around the legalese used in regulations. Like Meal & Rest Break compliance, California restaurants are especially at risk regarding Predictive Scheduling Laws. Below are examples of specific legislation around scheduling requirements.

California “scheduling laws” that are not referred to as “scheduling laws” (but fall under the premium pay requirements for not complying with the law)

• • California requires Additional Premium Pay
    • An additional hour at minimum wage is due to employees when working a split shift
    • The requirement is that an employee earns at least minimum wage for all hours worked when there is a split shift, plus 1 hour of pay at minimum wage
  • Second shifts must be at least 2 hours in duration
    • If a second shift in one day is less than 2 hours in duration, the employee is due the difference between 2 hours and the actual shift length in hourly pay at the employee’s regular rate of pay
  • When an employee is scheduled to work and does report but is furnished less than half said employee’s scheduled day’s work, the employee is due half of the scheduled day’s work, but in no event for less than 2 hours nor more than 4 hours of pay, at the employee’s regular rate of pay
  • It is necessary to have records showing when the employee begins and ends each work period
    • Operators must record Meal periods, split shift intervals, and total daily hours worked

Predictive Scheduling Laws

• • At a high level, predictive scheduling requires employers to post work schedules in advance, generally 14 days
  • Some laws are more restrictive than others, with additional obligations for employers, including:
    • Communicating an estimate of how many hours a new hire can expect to work each week
    • Notifying employees of potential on-call shifts
    • Provide the opportunity to existing employees for more shifts before an employer hires a new worker
    • Payments to employees for schedule changes
  • Each jurisdiction handles predictive scheduling laws a bit differently
    • Cities that have predictive scheduling laws in place: Emeryville, CA; San Francisco; Seattle; New York City; Philly; Chicago
      • Example — Oregon Scheduling Laws:
        • Employers must give new employees a written good-faith estimate of their work schedule at the time of hire
        • A written work schedule is to be provided to employees at least 14 calendar days before the first day of the schedule
        • Employers and employees can request scheduling changes under certain conditions; however, employers must provide additional compensation for certain changes they request
        • Employers can’t schedule or require employees to work the first 10 hours following the end of the previous calendar day’s work shift or on-call shift
        • Employers must provide Additional compensation for schedule changes

Additional Payroll-Related Compliance Issues:

• Operators not paying overtime when an employee works over 40 hours in a week, or in some cases 8 and 12 hours in a day
• Not including service charges, commissions, or non-discretionary bonuses in the regular rate of pay
• Including BOH in tip-pool while at the same time taking a tip-credit on tipped employee’s wages
• Classifying an employee as a tipped employee because they receive a small amount of tips for a small portion of their job

RELATED: How to Record Tips in Accounting

The Solution – How To Make it Painless:

Working with a purpose-built restaurant compliance solution enables operators peace of mind that they’re always compliant with the law. RASI offers clients the security of knowing that proper rate of pay, overtime, meal, shift, and break compliance are properly and accurately tracked and reported!

The post Why You Shouldn’t Ignore Payroll Compliance & How To Make It Painless! appeared first on Restaurant Accounting Services, Inc..

While creative marketing strategies and honing in on profitable menu items may support growth, there are outside-of-the-box tactics that can help facilitate a steady increase in restaurant revenue. Strategic partnerships aren’t typically thought of as revenue generators. However, they create scale and provide expertise in areas beyond an operator’s bandwidth or knowledgeable scope in most cases. While RASI provides unmatched financial management within accounting and payroll, we’ve created strategic programs with premium industry leaders to offer a full-circle approach for restaurants to increase their revenues through our unique network of partners.

#1. Restaurant Payroll Compliance

Increasing restaurant revenue through payroll compliance is the simplest way to keep money in your pocket instead of losing it on costly payroll compliance issues. Above all, payroll is one of the most critical aspects of any business. Moreover, properly paying your team creates trust and longevity of employment. There’s security in knowing that proper rate of pay, overtime, meal, shift, and break compliance are accurately tracked and reported!

#2. Restaurant Capital Financing

Raising capital is critical for businesses to grow. Additionally, financing helps businesses manage cash flow, purchase new assets and inventory, and make improvements to increase revenue. Unfortunately, large banks decline ~75% of small business applicants, so qualifying for a bank loan can be difficult, and it can take months to secure a loan. This partnership can help you secure capital within 2–3 days. From term and merchant cash advance loans to SBA and equipment loans, Adesso will readily assist you in receiving that financing.

WATCH THE FULL VIDEO BELOW!

#3. Website Marketing

Popmenu helps restaurants reach new businesses and regain control of their online positioning. Restaurants can grow revenue by creating an online experience that converts website visitors into paying customers! This partnership provides a best-in-class website at zero cost upfront, easy access to updating your menu and website on the go from your phone or desktop, email marketing, and texting all from one unified platform, while removing additional 3rd-party tools and platform costs.

#4. Digital Banking & Accelerated Employee Payments

The need for contactless experiences and digital transitions has never been more in-demand. An indirect strategy to increase restaurant revenue is moving money faster and accelerating payday via digital banking. Restaurant managers can leave paper checks and pay cards in the past and create immediate cost savings with Branch. This partnership provides digital banking opportunities for restaurants to better control their cash flow and capitalize on time savings with the ability to lower their overhead costs as managers no longer need to cut and deliver paper checks. Additionally, operators can reduce employee turnover as they experience easy, digital access to wages up to 2 days early, without the traditional fees associated with brick-and-mortar banks!

#5. Modern Onboarding for Restaurants

Efficient Hire offers a proven suite of human resource software solutions that allow restaurants to streamline the hiring process from recruiting to onboarding while maintaining HR compliance. This partnership assists in eliminating the manual paper-driven frustrations with a fully automated process, ultimately saving valuable time and money. Restaurants can increase revenue by engaging with qualified candidates faster, remaining in ACA compliance; and, increasing employee retention through the ease and simplification of the employee journey from start to finish. Moreover, considering Efficient Hire’s Work Opportunity Tax Credit (WOTC) Solution, restaurants can take advantage of this federal tax credit for employers who hire and retain individuals with significant barriers to employment.

LISTEN TO THE FULL PODCAST EPISODE BELOW!

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The post Use These 5 Tools to Increase Restaurant Revenue in 2022 and Beyond appeared first on Restaurant Accounting Services, Inc..

Digital payroll for restaurants is critical in attracting and retaining top talent. In the on-demand world we live in, getting money in employees’ hands as quickly as possible is crucial for standing out amongst the competition. It’s also now possible through a new form of banking. Continue reading to learn about the various ways in which digital banking can aid restaurant operations in becoming more efficient and how making payroll a digital affair benefits employees in finding their financial success!

The process of restaurant payroll has shifted to digital

The reality of the restaurant world is that the worker demographic is exposed to the broader impacts of the pandemic far more than those in the corporate world. This fact has changed the game when it comes to banking and payroll. Restaurants need to create safe settings in which they can pay their employees in a timely fashion, beneficial to both parties. Four top areas of change include the following:

• Contactless experiences
• Methods to pay employees faster
• The move to fee-free digital banking
• Digital tip mechanisms

When COVID first hit, guests ordered food to go daily and only paid with their cards. Stores were left cashless, and operations had to pivot towards daily tips, yet they had no cash on hand. The move to digital banking has been monumental in changing this issue. Additionally, workers don’t have to wait two weeks to get tips on their paycheck, which is a significant benefit for businesses’ operational side and the worker’s livelihood.

The shifts and trends within the restaurant industry aren’t going to change. People aren’t going to go back to using cash because they like the ease and convenience that rides alongside digital banking. No one wants to wait in line at a bank branch to deposit a check; they want to snap a photo on their phone and have the money transferred almost immediately. The trend was trickling in that direction in the last 5-10 years, and COVID simply forced the change to happen on a global basis. Restaurants and businesses alike will still need the solutions for those contactless, digital payments moving forward.

How restaurants and franchisees are attracting & retaining top talent through digital banking

The industry is beginning to see many restaurant workers shift into on-demand gig economy platforms because they have more scheduling flexibility and receive paychecks more quickly. Because of this, there’s been a significant push away from people working in a traditional restaurant setting. Utilizing digital banking platforms can help mitigate this issue because restaurants can stay competitive within the job market by providing their employees with better banking solutions for two main reasons: 

• Utilizing modernized payroll solutions comes down to digital direct deposits; and, depending on the tools used, employers can shorten the pay cycle to get their paycheck a few days earlier than they traditionally did before digitized banking.
• The restaurant world is historically an entry point to the working world for many individuals. This presents an opportunity for an employer to help introduce employees to the banking world for the first time without worrying about overdraft fees or general cost associations.

WATCH THE FULL VIDEO BELOW TO LEARN HOW THE APP LANDSCAPE IN TODAY’S DIGITAL ERA HAS CHANGED THE FUTURE OF BANKING:

Top operational benefits through digital banking

Beyond the benefits of attracting and retaining employees with digital banking benefits, there are many operational benefits to a restaurant operator as well. The top benefits of digital banking include:

• Offers operators the ability to better control cash flow and true-up payroll since they don’t have to deal with floating checks
• Brings the ability to have monies transition out of the bank account on a quicker basis, which enables the operator to truly understand where their operational accounts lie
• Helps to eliminate paper checks and gets money in the hands of the employees digitally, placing the fiscal accountability on the employee rather than the manager
• Creates cost savings by eliminating the need to re-run payroll when employees lose or misplace their paystubs
• Generates time savings through the facilitation of a quick and streamlined payroll process

LISTEN TO THE FULL PODCAST EPISODE BELOW!

The post Top Ways Banking & Payroll Have Changed In Today’s Digital World appeared first on Restaurant Accounting Services, Inc..