A new restaurant operator is faced with countless decisions from location and staffing to the lower priority items of accounting. The choices associated with accounting set up are not glamorous but setting good policies early on can save headaches down the line.
One question we ask new clients is “What type of accounting period would you like to use? Monthly? 4/4/5? 13-4 week periods?”. Operators coming from different industries often wonder the relevance of this question while those who have worked in many restaurants usually have an immediate answer.
Here are some factors to consider while dates swirl in your head.
Calendar month
· Easy to remember period dates
· Requires payroll accruals
· Year to year comparisons can be misleading when there is an extra weekend in one year
· Holidays are consistent for year to year comparisons
4/4/5 or 5/4/4- Two four week periods followed by a five week period
· Allows for the same number of each day of the week each year for comparisons
· If biweekly or semimonthly payroll is run payroll accruals are needed in some periods and not others
· Can be confusing for people wondering, “is this the five week period?”
· Allows flexibility in day of the week chosen for period end date
· Different reporting periods for sales and payroll taxes vs. financial statements
13 four week periods
· If a biweekly payroll is used no accruals are needed
· Allows for the same number of each day of the week each year for comparisons
· Allows flexibility in day of the week chosen for period end date
· Requires a “catch up” 53rd week be added every fifth year
· Different reporting periods for sales and payroll taxes vs. financial statements
One of the most important factors to consider when making the decision is who will be the primary user of the financial statements? Will it be operations staff or more financially savvy bankers? The more adept the user is at analyzing financial information, the more complex your set up can be.
Monday, June 28, 2010
Tuesday, June 22, 2010
Perspective Helps!
Getting away – really away – from the workaday world is a great way to get perspective on one’s business.
Recently I was fortunate to spend two weeks in Australia. Take it from me… if you get the chance to go to Australia, take it. Australians are probably the nicest people you will ever meet. They are patient, approachable, engaging, and fun loving. The only minor issues are 1) Australians talk funny 2) getting there takes forever and 3) Aussies drive on the wrong side of the road. Avoid driving “down under” unless you want an extra dose of excitement in your visit.
Talking with restaurateurs and vintners on the other side of the world gives another perspective to the issues and challenges of the Atlanta restaurant industry. The restaurant industry there, as here, is vibrant, dynamic and challenging. Here are a few principles that unite restaurant operators from these two countries:
· Sales cover a lot of sins – Driving revenues is important in Australia as it is here. There is just no replacement for have robust and consistent revenues. Operators can make mistakes but can recover when sales are strong.
· Local and fresh ingredients are king – It is remarkable how incredibly similar to the US is the focus in Australia on fresh ingredients used “in season” and from local growers.
· Prime cost rules – No matter where your restaurant, prime cost is a critical measure of success. Restaurants that get prime cost right are likely to be profitable and long-lived.
· Talent out the ears – Increasingly well-trained, conscientious cooks can be found in the US in the most unlikely places. In Australia it is not at all unusual to run into a classically-trained chef working away in her own shop in a small “outback” town
· Diversity "It's what's for dinner" – Not long ago Australian restaurants were mostly known for fish and chips. Not unlike our own Southern fried chicken and BBQ. Thanks to more lenient immigration policies in the US and Australia new international flavors, cooking techniques, spices and dishes are flourishing.
To be sure there are major differences between operating a US restaurant and one in Australia.
· Volume is less there – Australia is a country the size of the US but with only the population of New York State. Outside of the 3 or 4 big cities, there just isn’t the population or the sales volume found in the US. And yet professionals still pursue their passion for food and wine. It makes for a slower pace of life but no one appears to mind.
· Labor is higher but tipping is less – In the US servers are typically paid $2.13/hr. So they live on what they make in tips. This has a salutary effect of encouraging servers to see that tables turn efficiently but quickly. The owner has the same objective. In Australia restaurants are required to pay servers a higher wage. Naturally this results in higher menu pricing. But tipping does not carry the same importance there. Servers make higher wages and therefore are less incented to see tables turn quickly.
Visiting other restaurant operators reminds us that some universal principles apply to our industry. It may even raise the curtain on future trends and developments we are likely to experience in our Atlanta restaurant market.
New Trends Impacting Restaurant Operations
For years restaurateurs have been folding Internet technologies into their businesses. It’s all on the Internet: ordering - promotions - credit cards – banking- reservations - food ideas - cocktail recipes! Restaurant operators go online daily. Even so, operators are just now really dipping their spoons deeply into the rich world of the Internet! The most significant new trends in restaurant technology are deeply rooted in the online world.
· Social Media – Secret of Successful Operators
Social media is how people share information in the Internet age. It is utterly amazing how social media, the world of Facebook, Twitter and blogs, is impacting even the smallest local restaurant operator. Restaurateurs that ignore social media do so at their peril. As accountants we can see the business impact of social media on local Atlanta restaurants. Simply stated, restaurateurs that promote their restaurants through the use of social media see an increase in sales. In many cases the impact on sales is substantial. As Tom Murphy of Murphy’s in Virginia Highland recently told me, “There is a conversation about our restaurant occurring every day on the Internet. We must be a part of that conversation.” Restaurant operators are employing social media to drive revenues, both through tightly targeted ‘touchs’ and through more broadly based methods including: 1) email messages about special offerings and events 2) Facebook invitations to “friends” for in-store promotions, 3) Tweet messages about limited time offerings, and 4) aggregated promo services such as Groupon. Tom Moore of Brick Store Pub tells how they “tweet” the arrival of a limited-supply beer and 8 to 10 customers show up for the special. We can raise a glass to that idea!
· Your Next POS Will Be A Subscription
Today operators spend thousands of dollars on point-of-sale (POS) technology - and then pay an annual maintenance fee for support and upgrades. In truth, the POS technology you purchase is obsolete the day it is installed. Insult to injury, operators and POS companies face a minefield of technical and other problems keeping POS systems upgraded and protected from credit-card hackers. It is a system that has generally worked...until now. Alan Wright of Postec, the POS company told me that “The push of legal liability and the pull of new technology will shift restaurants to a subscription POS model.” Today buying a POS is like buying a car – a large up-front investment and smaller maintenance investments. Tomorrow buying a POS will be like buying an insurance policy – a small upfront investment followed by a stream of payments covering hardware, software, maintenance and training. All sales and non-financial data will be kept at a secure, off-site location.
· Your Office Is Going Paperless
NetFinancials is primarily a large restaurant back office. Each month we handle the books for around 100 restaurants. About two years ago we decided to try the “paperless thing”. Today virtually all our internal documents are paperless. Here’s what we learned: 1) It’s easier to go paperless than you think, 2) paperless does save money - particularly on supplies and storage, and 3) your data is now easier to find - no more searching for files in the storage closet. Also, there are a growing number of options for storing data on-line. These “Internet filing cabinets” store your data making sure it is safe and available to you when you need it. All that most restaurants need to get started is a desktop scanner, an extra computer monitor and an Internet connection.
Technical innovation is a reality - both exciting and breathtaking - that opens many possibilities for businesses. Savvy restaurant operators are making this innovation work for them, building more successful, satisfying and profitable operations.
· Social Media – Secret of Successful Operators
Social media is how people share information in the Internet age. It is utterly amazing how social media, the world of Facebook, Twitter and blogs, is impacting even the smallest local restaurant operator. Restaurateurs that ignore social media do so at their peril. As accountants we can see the business impact of social media on local Atlanta restaurants. Simply stated, restaurateurs that promote their restaurants through the use of social media see an increase in sales. In many cases the impact on sales is substantial. As Tom Murphy of Murphy’s in Virginia Highland recently told me, “There is a conversation about our restaurant occurring every day on the Internet. We must be a part of that conversation.” Restaurant operators are employing social media to drive revenues, both through tightly targeted ‘touchs’ and through more broadly based methods including: 1) email messages about special offerings and events 2) Facebook invitations to “friends” for in-store promotions, 3) Tweet messages about limited time offerings, and 4) aggregated promo services such as Groupon. Tom Moore of Brick Store Pub tells how they “tweet” the arrival of a limited-supply beer and 8 to 10 customers show up for the special. We can raise a glass to that idea!
· Your Next POS Will Be A Subscription
Today operators spend thousands of dollars on point-of-sale (POS) technology - and then pay an annual maintenance fee for support and upgrades. In truth, the POS technology you purchase is obsolete the day it is installed. Insult to injury, operators and POS companies face a minefield of technical and other problems keeping POS systems upgraded and protected from credit-card hackers. It is a system that has generally worked...until now. Alan Wright of Postec, the POS company told me that “The push of legal liability and the pull of new technology will shift restaurants to a subscription POS model.” Today buying a POS is like buying a car – a large up-front investment and smaller maintenance investments. Tomorrow buying a POS will be like buying an insurance policy – a small upfront investment followed by a stream of payments covering hardware, software, maintenance and training. All sales and non-financial data will be kept at a secure, off-site location.
· Your Office Is Going Paperless
NetFinancials is primarily a large restaurant back office. Each month we handle the books for around 100 restaurants. About two years ago we decided to try the “paperless thing”. Today virtually all our internal documents are paperless. Here’s what we learned: 1) It’s easier to go paperless than you think, 2) paperless does save money - particularly on supplies and storage, and 3) your data is now easier to find - no more searching for files in the storage closet. Also, there are a growing number of options for storing data on-line. These “Internet filing cabinets” store your data making sure it is safe and available to you when you need it. All that most restaurants need to get started is a desktop scanner, an extra computer monitor and an Internet connection.
Technical innovation is a reality - both exciting and breathtaking - that opens many possibilities for businesses. Savvy restaurant operators are making this innovation work for them, building more successful, satisfying and profitable operations.
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