Improving restaurant efficiency through policies and restaurant benchmarking can become an ongoing part of your point of sale and accounting systems, allowing you to make continuous improvements to the key factors that drive your restaurant’s efficiency. This can help owners and managers exceed industry benchmarks, free up focus for customers and growth, and create an easier path to sell when it’s time.
If a restaurant doesn’t have effective policies in place for all of the small daily actions taking place, it’s easy to lose money through inconsistencies. Policies for the following daily tasks and restaurant care will help restaurants be more efficient even during times of staff turnover.
- How drinks are made
- How cleaning is handled
- How sales are entered into POS
- Customer service techniques
- Tasks specific to staff roles throughout service times
- Delivery of meals
- Closing duties including paperwork
- Vendor interaction
Policies should also cover preferred vendor relationships. Picking different vendors month to month can create inconsistent costing. The more consistent numbers are across all areas of the restaurant, the faster owners and managers can see weak points and correct them.
For example, payroll is the most up-to-date KPI in a business — and the most expensive. A well-managed payroll and benefits system takes time and strategy, and the opportunity to address payroll complexity first lies with your CPA. This relationship can either simplify or increase complexity. Restaurant owners must account for federal income tax, federal and state unemployment tax, Social Security and Medicare. Many companies have run into trouble in the areas of paying unemployment taxes, making late payroll deposits, incorrectly classifying employees as independent contractors on 1099s and assuming that depositing payroll is the same as reporting.
In addition, The Department of Labor’s impending changes to overtime 
exemption rules are creating even more angst in the area of wage and hour compliance. Employees previously exempt from overtime rules may now be considered non-exempt, leading to the need to track overtime hours and communicate possible changes in benefits. It may even require employers to dictate how employees can take time off or how they work outside of normal business hours. These changes tie directly into payroll administration and tax planning.
On the benefits side, employers can offer a variety of things to compete for talent as well as help employees work efficiently. Properly classifying these benefits and properly withholding for pre-tax or taxable benefits simply adds to the complexity. Handle something wrong, and you will have compliance problems as well as upset employees.
It is fair to say that payroll administration and compliance is a big deal. While some CPA firms offer payroll administration as part of basic or strategic accounting services, the level of administration and services vary widely. The potential benefit of having your CPA firm handle payroll administration, however, is that the team understands the world of taxes and accounting. They can streamline payroll reporting, deposits and filing schedules into the audit or tax deadlines they already handle for the business.
However, not every CPA firm offers payroll administration. Due to its complexity, it’s also important that the firm has a staff of professionals dedicated to this area of your business.
Restaurant Benchmarking
Industry benchmarks are a key indicator of how well a restaurant is performing against industry standards within a certain time period. You can gauge performance against restaurants of similar size and revenue by comparing your assets, liabilities and net worth. The 2016 restaurant benchmarks below are provided by BKR International, a top global accounting association, in conjunction with First Research. They show benchmark ratios based on 2014 data from more than 500,000 restaurants, and detailed out by restaurant size and revenue.
As you can see, benchmarks can provide a quick snapshot of how a restaurant is performing by just looking at quarterly financial statements against what analysts are reporting from the industry as a whole. Once you understand where your restaurant is performing well and where it misses the mark, you can focus time and resources in the right areas.
Restaurant accountants know the techniques that help restaurants be more efficient. We know the benchmarks discussed here and we’ve helped other restaurants reach them. If you have a serious interest in making your restaurant more efficient, talk to the accounting team at Cornwell Jackson. You’ll be surprised what a difference it can make in your efficiency, bottom line and peace of mind.
Scott Bates, CPA, is a partner in Cornwell Jackson’s audit practice and leads the Cornwell Jackson business services practice, including outsourced accounting, bookkeeping, and payroll services. He is an expert for clients in restaurants, healthcare, real estate, auto and transportation, technology, service, construction, retail, and manufacturing and distribution industries.
