How does bookkeeping work for a restaurant or café?
A café books its sales from the till each day, records tips and service charges separately, and tracks what food and drink cost against what they sold for.
A café sells over a counter all day, so the books start with the till. Each day’s sales, split by what was sold and how it was paid, go into the ledger as one summary instead of one entry per cup. The basics are the same ones that sit behind every business, and where the basics live is a good place to refresh them.
The café is where my coffee started, and it has the busiest books of the three businesses. If the vocabulary is new, bookkeeping in plain terms covers it, and how the two jobs differ explains why a bookkeeper records and an accountant reads the result.
What a café records every day
Four things matter most at a counter. Sales by category come from the point of sale report. Cash taken in has to match the drawer. Card sales arrive in the bank later and net of fees. Tips and service charges need a home of their own.
That last one trips people up. The IRS draws the line this way: Mandatory service charges are not tips, and they count as income to the business. Because tips belong to staff and service charges belong to the business, they sit in different places in the ledger. How staff are paid out of them is payroll, and payroll has its own rules.
Online orders add a second sales channel with its own payouts, and keeping books for web sales covers that side. Owning more than one business adds another layer, so running several businesses’ books matters from the start.
Food cost and the tools around it
Food and drink cost is the number a café watches most. It needs every supplier invoice recorded and the stock counted now and then. Some tools read the invoices for you and cost the recipes, and tools that connect to a restaurant POS are ranked separately.
Two paths exist for the ledger underneath. A general package can hold the books, and Xero in detail and QuickBooks Online’s strengths and gaps show how each one scores. A restaurant-specific system such as Restaurant365 can replace the general package.
Other costs a café meets
A café that sells packaged goods or ships anything meets sales tax, and tools for calculating and filing sales tax handle the paperwork. A café with a web shop can lean on ecommerce-ready accounting tools for the online half.
Handing the work to a person is the other option, and the monthly price of help depends on how much there is to record.
Common questions
Are tips part of a café's sales?
No. Tips go to staff, and the IRS says Mandatory service charges are not tips, and they count as income to the business. Keeping the two apart in the ledger saves a lot of untangling later.
What is food cost?
Food cost is what the ingredients and drinks cost compared with what they sold for. A café needs the purchases recorded to see it.
Does a café need special software?
A general ledger can hold a café’s books. Tools built for restaurants add invoice capture and recipe costing, such as MarginEdge, which publishes a flat price of $350 a month per location.