September 30, 2016

How to Open a New Restaurant With Bookkeeping

Overview

Opening a new restaurant is a financially risky proposition. According to Ohio State Research News, more than half of all new restaurants fail in the first year of operations. These failures are due to three main factors; insufficient startup funding, inexperienced owners and a lack of basic bookkeeping skills. These factors can be negated with proper training and planning. You can start a new restaurant and succeed by knowing the industry, following a written plan and keeping immaculate records.

PART I – Learn the Business

Step 1: Learn how the front of the house operates. Start by busing tables, work you way up to server then to management. Take notes on proper service and cleaning techniques as well as the equipment and supplies you will need in your own restaurant.

Step 2: Learn how the back of the house operates. Start as a dish washer and work your way up to prep cook. Graduate to line cook and work the salad, fryer, flat grill, broiler, and expo stations. Work your way into a management position in the kitchen. Take notes on food safety, recipes, cooking and cleaning techniques as well as equipment, supplies and food ordering prices and procedures.

Step 3: Work in general management to learn how to combine your knowledge into a successful restaurant. Learn how to deal with licenses, taxes, payroll, customer service and employee management. Keep a journal of every scenario throughout your tenure to give you a reference for your business in the future.

Part II – Starting Your Restaurant

Step 1: Review your notes. Make a list of all of the equipment and supplies you will need along with a list of furniture, office supplies, licenses, permits and inspections. Get current prices for all of your needs. Make another list detailing your employee opening payroll needs. Stretch these lists out to at least two years to get a startup figure.

Step 2: Draft a business plan that takes you from opening through the first two years of your business. Refer to your journals from previous work to determine possible future income according to day of the week and time of the year. Plan a labor schedule outlining the number of employees working in each along with pay and benefits for each in order to obtain a projected labor cost.

Step 3: Find a piece of property. Negotiate a deal with the property owner. Take the specifics of this deal along with your two year price list of equipment, supplies and other needs to the loan officer at your bank along with your business plan. Apply for a business loan.

Step 4: Take the money from your loan to purchase insurance and licenses. Pay the negotiated price on the piece of property. Purchase everything on your lists. Hire qualified employees for every position. Setup your restaurant and train your employees. Open the restaurant after an intense media blitz that announces the presence of the new restaurant to your target audience.

PART III – Startup Bookkeeping

Step 1: Record the amount of money obtained through your business loan as a positive balance in your ledger. Add any cash funds that you and/or your business partners have available for the operation of your restaurant. This is your startup amount. The higher this number is the better chance your restaurant has for success.

Step 2: Record each individual expenditure as a debit in your ledger. Make a note in the ledger explaining exactly where each dollar is spent. Save every receipt as proof of entries in your ledger. Make a copy of every record to send into the appropriate authority when filing your federal, state and local taxes each quarter.

Step 3: Record each debit as it is paid. Rent or mortgage, utilities, loan payments, food orders and payroll are recurring debts that must be recorded as soon as payment is made. Tally your ledger account at the end of each day in order to know exactly where your restaurant stands financially as far as income to expenditures for the day.

Step 4: Keep a weekly ledger for a more realistic view of your restaurant’s financial status. Start this ledger with the total debt your restaurant owes. Add every debit to this amount. Deduct every penny of income from this debt in order to learn the actual current financial status of your business.

Keywords
  startup restaurant bookkeeping
  starting your restaurant
  successful restaurant startup

Warnings
   Restaurants are required to have several licenses and permits before startup. Check with your state and local health departments to learn which ones are required in your area. Keep your licenses, permits and inspections current to avoid forfeiture of your restaurant and civil fines.

   Food safety is the number one priority of any restaurant. Keep all of your appliances working properly, train every employee in food safety before allowing him to begin work and make daily inspections of the equipment and employee procedures. One instance of negligence will cause illness or death and cost you your restaurant and can result in civil fines and possible criminal prosecution.

Reference
   Starting Your Own Restaurant; Thinking About Starting Your Own Restaurant; All Food Business; 2008 [http://www.allfoodbusiness.com/starting_your_own_business.php]

Danny Donahue is a full time freelance writer/artist/voice talent. He has written over 1000 articles on subjects ranging from child development to drug addiction to home improvements. You can learn more about Danny’s past and current projects via email at revcozmo at aol dot com.