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How to keep the books for the catering industry: experts’ explanations

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3/23/2023

Accounting in the catering industry is quite complex since within one establishment it is necessary to keep records of different types of activities: production, sale of products, and provision of services.

How to keep records of the production of the finished products

You buy products, process them, and get dishes that you sell to your customers. 
To correctly calculate the cost of each item for visitors, you need to make calculations.

The procedure is as follows: 

  • Think through the menu - a list of dishes that you plan to offer your guests.
  • Develop a technological chart for each dish. The flow technology is a document containing detailed information about the item: shelf life, recipe, portion weight, and description of appearance. It may be requested by inspectors to make sure that you comply with all the requirements.
  • Find out the cost of each product from the suppliers you plan to work with. If you use processed foods (boiled, fried) in your calculations, consider a loss factor.
  • Calculate the target prime cost per serving for each dish based on the technological chart and the purchase price of the products.
  • If the delivery and unloading of food are paid for separately, include these costs in the calculations. 
  • Accounting in the catering industry usually uses the batch method - accounting for the production and sale of a batch of goods, for example, 10 cakes or 25 servings of salad. A certain amount of products is allocated for each batch. 
  • In addition to the cost of ingredients, you need to account for the salaries/wages of employees (administrators, cooks, waiters, dishwashers, cleaners, etc.), equipment depreciation, rent, utility bills, and other expenses. Do not forget to account for taxes in the calculations, both related to salaries/wages and depending on the chosen taxation system. Also note that you will also have to pay taxes for some contractors (micro businesses, individuals (non-employees), etc.).
  • To simplify the process and minimise the risk of errors, we recommend creating costing templates or using specialised services.

How to account for salaries/wages

When opening a restaurant, cafe, or bar, decide at the start how many employees you need in each area: in the kitchen, in the hall, and at the warehouse. 

Setting the duration of shifts and the amount of remuneration, remember the need to comply with the Labour Code of Georgia. 
Hourly payment scheme (wage) is applied most often in eating establishments.  
There is an hourly rate or wage, based on which the amount payable is calculated based on the actual time worked. 
Sometimes once a month or quarter, a bonus is paid for quality work.
In addition to the accrual of wages, vacations and sick leave of employees are to be officially recorded.

How to account for stock balances.

You need to keep track of:

  • Receipts. In addition to goods, you will receive documents from the supplier: contracts, statutory documents, price lists, and certificates. Be sure to keep them: they may be needed during inspections.
  • Write-offs. Products transferred from the warehouse to the kitchen can be used to prepare dishes ordered by guests, feed employees, develop a new recipe and create a technological chart, etc.

Sometimes products spoil - they have to be written off and disposed of. Please note that the write-off of the utilised goods occurs as follows: in the tax account an application "Confirmation of the document on the expired and/or useless inventory write-off " must be filled out; if you do not receive any feedback from the tax office within 2 working days after sending, you shall dispose of it without their presence, if you receive any message - act on its basis.

We hope that this material helped you and that after reading it you know how to keep accounting for the catering industry. We recommend you entrust accounting to specialists with experience in restaurants, cafes, and bars, who know all the nuances, which means that they will insure you against unnecessary inspections and fines.
 

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