Restaurant Accounting 101: Prime Cost, Tip Pools and Weekly Cash
Restaurants live and die by margin. Monthly bookkeeping is too slow — by the time the month closes, the damage is done.
The three numbers that matter
1. Prime cost
Prime cost = COGS (food + beverage) + total labour. Healthy restaurants run 55–65%. Above 70%, you’re losing money.
2. Daily sales by service
Lunch vs dinner, dine-in vs takeaway, by day-of-week. Patterns expose under-staffing and over-staffing fast.
3. Weekly cash position
Cash on hand, accounts payable due in 7/14/30 days, payroll coming up. Without this, one slow weekend kills you.
Tip pools and labour
Get tip allocation right (UK Tronc, US tip credit / pooled tips). Misallocate and you’ll trigger payroll tax issues — or worse, a staff dispute.
POS integration is non-negotiable
Toast, Square, Lightspeed, Clover — daily sales should flow into your accounting software automatically with sales tax / VAT split out.