Bookkeeping for restaurants
that tells you prime cost by Tuesday, not at year-end
Full-service, fast-casual, bar, coffee, and delivery-heavy operators. POS reconciliation (Toast, Square, Clover, Revel), delivery commission handling (DoorDash, UberEats, Grubhub), tip pooling + Form 8027 compliance, liquor excise tax, gift card liability, and customer deposits — handled monthly and delivered by the 10th.
What we look at every month
Operational mechanics that only show up in restaurant bookkeeping — not retail.
Prime cost (food + labor)
COGS + total labor tracked weekly. Healthy range 55–65% depending on concept. Above that, something is broken.
COGS by menu category
Food, beverage, alcohol, paper, and cleaning as separate lines. Target food 28–32%, alcohol 18–22%.
Tip pool + Form 8027
Charged tips, reported tips, allocated tips tracked all year so the January 8027 filing is a formality.
Third-party delivery commissions
DoorDash, UberEats, Grubhub, ezCater — gross sales and 25–30% commission broken out separately so you see real margin.
Liquor license + excise tax
Annual license fee amortized monthly. Federal (TTB) and state ABC excise tax tracked separately from sales tax.
POS reconciliation
Toast, Square for Restaurants, Clover, Revel daily reports reconciled to bank deposits — gross vs net, fees, tips paid out.
Gift card liability
Outstanding gift cards on the balance sheet. Revenue recognized on redemption; breakage under a disclosed policy.
Delivery payout timing
Each platform pays on its own cadence (weekly, daily, instant). Tracked so cash-flow timing is accurate and reserves can be projected.
What usually goes wrong
Five mistakes we fix on almost every restaurant cleanup we take over.
Booking gross delivery sales as revenue
A $40 DoorDash order lands as a $28 deposit after 25–30% commission and processing. Booking the $28 as revenue understates gross sales by 30% and loses the commission deduction. Correct treatment: record $40 as gross revenue, $12 as third-party commission expense, reconcile to the $28 net deposit. Applies to DoorDash, UberEats, Grubhub, ezCater, and ChowNow.
Tip pooling missing Form 8027 obligation
Restaurants with 10+ tipped employees on a typical day must file Form 8027 annually, reporting gross receipts, charge receipts, charged tips, and reported tips. Miss it and the IRS allocates tips for you — almost always worse for the restaurant and employees. We track all four data points monthly so January filing is clean.
Liquor excise tax bucketed with sales tax
State and federal alcohol excise tax is a separate obligation from sales tax. Lumping them misstates both balances and makes audits painful. Break them out cleanly; amortize annual liquor license fees monthly instead of expensing in the month paid.
COGS category drift
Food, beverage, alcohol, paper, and cleaning all getting dumped into 'COGS' means you can't see where margin is slipping. A 33% food cost might be actually 29% food + 42% alcohol (which is the real problem). Separate lines force clarity.
Gift card liability not tracked
Gift card sold = cash in now, revenue later (when redeemed). Most independent restaurants book the sale as revenue, then again when redeemed — double-counting. Or they ignore breakage and never recognize unredeemed balances. Both are wrong.
What your books should tell you every month
The operational KPIs restaurant owners actually need — delivered by the 10th.
Prime cost % vs target (60–65%)
Food + labor as % of revenue, with week-over-week trend. Above target = staffing or pricing problem; below = probably understaffed.
Food cost % by category (28–32% typical)
Food, beverage, alcohol, and paper broken out separately so concept-level margin problems are visible.
Labor cost % (25–35%)
Total payroll + benefits + payroll tax as % of revenue. Trended by day-of-week to spot over-scheduling.
Dine-in vs delivery mix
Revenue and margin by channel. Delivery margin after commission is usually 50–70% of dine-in margin — you need to know the split.
Average ticket by daypart
Lunch vs dinner vs late-night ticket size. Drives marketing decisions and helps catch menu engineering opportunities.
Gift card liability balance
Outstanding unredeemed gift card liability on the balance sheet. A large balance with low redemption may signal a breakage opportunity.
Documents we need from you
Connect the POS and upload the items below. We handle the rest.
When basic bookkeeping isn't enough
You've outgrown the Essentials plan when any of these show up:
- 2+ locations or a franchise (Subway, Jersey Mike's, Chick-fil-A, etc.)
- 15+ W-2 employees across FOH, BOH, and management
- Large catering or private event book with multi-month deposits
- Retail sales or packaged goods in addition to dine-in
- SBA loan or investor reporting requiring GAAP-compliant financials
FAQs — Restaurant Bookkeeping
How do I reconcile DoorDash deposits?
DoorDash (and UberEats, Grubhub) takes ~25–30% commission plus processing fees before the deposit lands in your bank. If you book the deposit as revenue, you've already lost the commission deduction. Correct treatment: record gross delivery sales from the Merchant Portal report, record commission as expense (this is where 'Marketing' or 'Third-Party Delivery' category lives), record the processing fee, reconcile to net deposit. Each platform has its own weekly or daily payout cadence — we track them separately so reconciliation is clean.
What's Form 8027 and do I need it?
Form 8027 is the 'Employer's Annual Information Return of Tip Income and Allocated Tips.' You must file it if you have 10+ tipped employees on a typical business day. It reports gross receipts, charge receipts, charged tips, reported tips, and allocated tips. Miss it and the IRS can allocate tips for you — which almost always means more tax exposure for the restaurant and the employees. We track the data monthly so the January filing is clean.
How do I track gift card liability?
Gift card sales are not revenue when sold — they're a liability until redeemed. Revenue recognizes on redemption (the customer comes in, orders $50 of food, and the gift card clears). Breakage (cards that expire or are never used) recognizes under a specific accounting policy, typically proportionally as redemption history indicates. Most independent restaurants never set up the liability properly and book the initial sale as revenue, which inflates current revenue and double-counts when the card is eventually redeemed.
What's a healthy prime cost?
Prime cost = cost of goods sold (food + beverage) + total labor cost (wages + payroll taxes + benefits). As a percentage of revenue, healthy prime cost varies by concept: 55–60% for full-service dinner, 60–65% for most casual concepts, 65% for diners and breakfast. Above 65% and you're either over-staffed, overpaying for ingredients, or under-pricing the menu. We produce prime cost weekly so you can intervene before month-end.
How do I handle POS reconciliation for Toast or Square?
Your POS records gross sales, taxes collected, tips, and discounts. The bank shows deposits — gross card sales minus processing fees, tips paid out, chargebacks, and held funds. The two won't match unless someone reconciles daily. We pull Toast, Square, Clover, or Revel daily reports, reconcile them to bank deposits, and break out food vs beverage vs retail vs gift card activity.
How do you split food cost by menu category?
Food cost should break out as: food (proteins, produce, dry), beverage (soda, coffee, juice), alcohol (beer, wine, spirits), paper goods, and cleaning supplies — each as its own line. Target ranges: food 28–32% of food sales; alcohol 18–22% of alcohol sales; beverage 15–20% of beverage sales. Lumping them together hides the concept-level problem: a bar pulling down 35% food cost with stellar 18% alcohol cost is healthy; 32/32 is not.
Do you track liquor license fees and excise tax separately?
Yes. Annual liquor license fees are amortized monthly (not expensed on the month paid). State and federal liquor excise taxes (TTB for federal, state ABC for state) are tracked separately from sales tax. Some states tax alcohol at different rates than food; breaking them out cleanly saves a lot of audit pain later.
Can you track customer deposits on large bookings?
Yes. Private dining deposits, catering deposits, and event retainers are liabilities until the event is delivered. We hold them on the balance sheet as 'customer deposits' and recognize revenue on event day. Booking deposits as revenue when received inflates current-month revenue and creates a messy correction later.
Related Pages
You run the pass. We'll run the books.
Plans from $249/mo. Prime cost visibility, POS reconciliation, delivery commission handling, Form 8027, and software included.