“Good sales, but no profit” is a major problem for SME restaurants and one important cause of this problem is that SME restaurateurs neglect their own accounting!
Let’s take accounting seriously. Just some basic accounting can help entrepreneurs know the status of their own businesses at any given time and make preparation plans.
Basic Accounting for Owners of Small Restaurants
In income-expense accounting, the following items have to be entered:
1. Record revenues from daily sales. Record all your sales bills in a cash received book. Record your cash received. If you want to categorize foods by menu items to learn how much each menu item is sold, you have to record daily sales summaries to sort your daily sales by menu item.
Example of a daily sales summary:
|Name of Menu Item||Sales Price/Baht||Amount||Total Sum|
|Tom Yum Goong||250||40||10,000|
|Yum Ruam Mit||159||40||6,000|
|Fried Bass in Fish Sauce||400||40||16,000|
|Crab Fried Rice||120||40||4,800|
Once you have recorded your daily sales, record your total in an income-expense book.
Example of an income-expense book:
- Record daily expenses such as expenses for fresh ingredients, dried ingredients, gas, electricity, rent, employees and, importantly, your own labor.
Example of a daily expense table:
|Water (for July)||500||21,300|
|Electricity (for July)||5,000||16,300|
|Rent (for September)||12,000|
|Employee labor 4×350||1,400|
(*The items and prices in the table are invented to improve understanding. Actual values will depend on the situation of each entrepreneur.)
Looking at the income-expense records above, you can see than, on 1/8/2019, the revenue from sales totals was 36,800 baht. And expenses totaled 34,700 baht, so the business profit on that day is 2,100 baht. How come there is so little money left? From the record, you can see that monthly expenses such as for water, electricity and rent are paid on that day. The benefit of income-expense accounting is that it allows entrepreneurs to know their daily sales, daily revenue from sales, daily expenses and profits. It provides a reference document to accompany the cash in hand, and the numbers can be used to improve management. For example, is the seafood being purchased too frequently? Its purchase price equals to how many percent of sales? For the most part, the cost for fresh ingredients in restaurant businesses should not exceed 35-45 percent of sales. Even though this is just basic accounting, entrepreneurs can learn about the health of their own business. If cost is controlled appropriately and calculated for appropriate sales price setting, it won’t be difficult for small restaurant businesses to make profits. So, if any entrepreneur still has not taken accounting seriously, we recommend that you begin now today to ensure a bright future for your business.
You can learn more about income-expense accounting in the online course “Simple Profit & Loss Management”.