Running a quick-service restaurant is no picnic. Aside from keeping up with daily orders, there are labor shortages, high food prices, tight margins, and intense competition to navigate. On top of all of that, you have to properly account for all of your revenues and expenses. At Ceterus, we understand the unique challenges faced by QSR operators – and we know how to raise your game so that your reporting is seamless and helps drive better business results.
Effective Accounting Practices for QSR Operators
When it comes to your operation’s tax compliance and overall financial health, effective franchisee accounting practices are a crucial ingredient. Proper accounting ensures transparency, enables informed decision-making, and helps you manage your business for efficiency and profitability.
- Maintain timely and accurate records: Just as your cooks can’t make a good meal without the proper ingredients, a business owner needs accurate and up-to-date financial records, including sales, expenses, inventory, and payroll.
- Use accounting software: Adopt an accounting software that integrates with the franchisor’s systems (if applicable) and enables real-time reporting. This streamlines accounting processes and ensures data accuracy.
- Standardize the chart of accounts: Your franchisor probably wants you to follow a standardized chart of accounts. This ensures consistency and easy comparison of financial data across the franchise network.
- Understand your franchise agreement: Make sure to follow the financial obligations and accounting requirements outlined in your franchise agreement. Comply with reporting timelines and fee payment terms.
- Separate business and personal finances: To avoid commingling of funds and to simplify accounting, keep separate bank accounts and financial records for your business.
- Focus on budgeting and financial planning: Create and adhere to a comprehensive budget that includes sales projections, expense forecasts, and capital expenditure plans. Then regularly review and adjust your budget as circumstances change.
- Monitor cash flow: Maintain adequate working capital to cover operational expenses and manage unforeseen challenges.
- Recognize revenue accurately: Properly account for sales – including gift cards, discounts, and loyalty programs – to accurately allocate revenue.
- Implement effective inventory management: Regularly reconcile physical inventory counts with your accounting records to minimize waste, spoilage, and stockouts.
- Monitor labor costs and productivity: Track employee hours accurately and allocate labor expenses to different cost centers as required.
- Track and pay taxes promptly: Stay compliant with tax laws and regulations. Keep track of sales tax, payroll tax, and income tax liabilities, and ensure timely payment to avoid penalties.
- Monitor important metrics: Analyze key performance indicators (KPIs) such as food cost percentage, labor cost percentage, gross margin, and break-even point. Use these metrics to evaluate business performance and identify areas for improvement.
- Generate regular financial reports: Profit and loss statements, balance sheets and cash flow statements help you make data-driven decisions that can help grow your business.
- Record capital expenditures accurately: To produce accurate financial statements and tax records, properly account for capital expenditures and depreciation.
QSRs Face Unique Accounting Challenges
At Ceterus, we understand the nuances of the food industry. If you’re struggling with any of these issues, we can help:
- Complex sales transactions: QSRs often have high transaction volumes and offer various products, combo deals, and discounts. Accounting for these complex sales transactions accurately can be challenging, especially when handling cash purchases.
- Inventory management: QSRs deal with perishable goods and fluctuating demand, making inventory management critical. Properly accounting for inventory usage, spoilage, and waste is essential for cost control and accurate financial reporting.
- Managing multiple locations: Consolidating financial information from various locations while ensuring accuracy can get complicated. With Ceterus, you can view your financial statements for each location independently or compare them.
- Sales tax compliance: If you operate in more than one municipality, sales tax compliance can be tricky because of varying tax rates, rules and exemptions across different jurisdictions. Failure to comply with tax regulations can lead to penalties and legal issues.
- Seasonal fluctuations: Many QSRs experience ebbs and flows in sales, which affects cash flow and profitability. Proper accounting is essential to anticipate and properly manage these ups and downs.
- Gift cards and loyalty programs: Managing revenue recognition and liability for gift cards and loyalty programs requires meticulous accounting.
- Real estate leases: For QSRs operating in rented spaces, accounting for lease expenses, rent escalations, and leasehold improvements can be challenging.
- Capital expenditures and remodeling: To enhance operations and keep things fresh for customers, QSRs undergo periodic remodeling, and they routinely invest in new equipment. Properly accounting for capital expenditures and depreciation is essential.
These challenges can be a headache, but they’re manageable. By investing in a robust accounting solution like Ceterus, implementing effective internal controls, keeping proper records, and seeking accounting advice when needed, you can stay ahead of your accounting challenges.
Ceterus As Your Solution
At Ceterus, we understand how much of a burden bookkeeping for franchisees can be. That’s why we offer top-of-the-line accounting, tax prep services, and comprehensive financial insights.
With our tech-enabled software and a dedicated financial controller, you’ll get a clear view of your financial performance. With us, you’ll receive:
- Brand-compliant financial statements
- Timely transaction updates
- Peer benchmarking
- Ongoing tax advisory services
- Multi-unit reporting
- Cash flow projection
- Dedicated financial consultations
Stop handling the financial aspects by yourself. Schedule a consultation with Ceterus today!