New NRA book can help restaurateurs better prepare, present financial information
As restaurateurs explore the National Restaurant Association Restaurant, Hotel-Motel Show for products and services to enhance their businesses, many expressed interest in a new publication to help them accurately complete their financial statements.
At a standing-room only education session Saturday, RestaurantOwner.com executives walked attendees through the NRA's new "Uniform System of Restaurant Accounts."
The book is a guide to preparing and presenting financial information in standard format specifically for the restaurant industry. It helps restaurant owners and managers measure their financial results so they can make changes to operate more efficiently, says Jim Laube, founder and president of RestaurantOwner.com.
It also can help vendors and suppliers better understand their clients' businesses and give lenders and investors insight into restaurant financials, he said. Accurately measuring financial results is especially important in such a highly complex, competitive industry, he said. If you're not monitoring food and labor costs, they're hard to control, Laube said.
Managers and owners need to know if what they are doing is working, Laube said. If something's not working, they need to evaluate and make changes.
Restaurant financial statements should help restaurants determine how they're doing, whether their situations are getting better or worse, what problems are developing and where they should focus attention.
However, generic financial statements generally won't help restaurant operators determine that information, which is why there's a standard format specifically for restaurants. A standard reporting format provides guidance for accurate and consistent accounting of the myriad costs and expenses restaurants incur, he says. The "miscellaneous" category defeats the purpose of keeping accurate books, he notes.
That's why the latest edition of the book incorporates technology and other trends that have changed the way restaurants do business.
For example, the book now includes a "merchandise and other" category under "sales" because more restaurants sell hats, t-shirts and other non-food items, as well as renting banquet rooms, etc.
It also removed "labor" from "operating expenses" and created a separate category. That category includes separate line items for management salaries and staff wages.
The new book removes equipment leases from occupancy costs.
One benefit of the book is that it goes through every line item in the P&L. It also contains sample balance sheets and other documents and a guide to basic accounting and record keeping.
Joe Erickson, vice president of RestaurantOwner.com, said the chapter on accounting basics was especially important for independent operators. Many seem to have problems properly recording sales or are challenged by cash controls. Others don't understand the proper cost of goods sold and how that impacts their restaurants, he said.
The book covers federal, state and local taxes and includes a list of nearly 800 line items and and where the should be recorded.
"If you're going to be good at business, you have to understand the numbers," Erickson said. "It's paramount to being successful as an operator."
Plus, it helps "ceate a culture of cost awareness that will permeate throughout the restaurant."