Compared to the more glamorous aspects of running a restaurant—experimenting with new dishes, cultivating the perfect ambiance, recruiting top talent—bookkeeping is perhaps the duty restaurateurs are most loath to do. But seeking professional expertise in the form of an accountant who specializes in the restaurant industry can make all the difference.
At least that was the case for Codi Bates, a Lawrence, Kansas–based restaurateur who owns Bon Bon, a bistro that serves dishes based on her world travels, and a two-unit fast casual with her husband, Simon, called The Burger Stand.
Bates works with Mize Houser & Company, a multi-location Kansas accounting firm with a specialized restaurant group. Without them, her concepts wouldn’t be the successes they are today, she says. “They’ve helped us grow from one restaurant to three. They understand our industry, which is such a wonderful one, but it changes often and you have to constantly adapt, and our accounting partnership is constantly adapting,” she adds.
While working with a specialized accountant is important for restaurants of all sizes and types, it is especially essential for independent restaurants and small regional chains that are less likely to have in-house accounting teams.
“The small restaurant really doesn’t have time for the accounting function,” says Sean Dawson, CPA and tax shareholder at Mize Houser. “They’re more worried about staffing and food costs and the menu so the last thing they have time for is accounting.”
If operators run the numbers in a distracted state, problems with cash flow and taxes can arise, says Kristin Wing, marketing program manager at Mize Houser. Depending on a client’s needs, restaurant accountants can handle financials like accounts payable and payroll, or they can double-check the numbers that the staff inputs. Either way, potentially mistakes can be averted.
Big chains often have more resources provided by corporate. Smaller operators have to find their own service providers, like banks, investors, and lawyers, Dawson says. They also have to determine the correct legal structure for their restaurants. Helping source these professionals and answering these questions are services restaurant accountants provide that operators may not be aware of, he adds.
Bates particularly loves how her restaurant accountants can find specific numbers and create projections that illuminate how the business is doing and how different situations could affect it. Nine years ago, she and Simon started The Burger Stand in the back of a bar and attempted to run the financials on their own, relying on QuickBooks. After a year, they realized an accountant was in order and, when they began working with Mize Houser, saw a huge difference. The accountants found numbers that helped them understand their food costs, labor costs, and other expenses, as well as how to become more efficient or save money. The Bateses began to understand not only what was and was not working, but why.
“We didn’t really have all the information or the accounting background to be able to pick out the numbers that were the most valuable,” Bates says. “Doing a scan through QuickBooks didn’t work for us. Our accountants go above and beyond. They find numbers we didn’t even ask for but they think will be useful to us.”
Most recently, the Bateses have moved toward providing a living wage and health insurance to all of their 150-plus employees. Their accountants helped make the shift a reality, Bates says. They ran numbers for various scenarios, showing Bates what the financial costs and benefits of providing higher wages and insurance would be. They looked at how paying insurance costs would work if the restaurants had a bad few months. They saw which areas of the business would be relatively safe and which would be at a higher risk if the owners made the changes.
Being informed enabled the Bateses to feel secure in making a decision. “We wanted to do it, but it’s hard to figure out how,” she says. “That obstacle is ‘I want to do this, but how do I do it? Is it going to cost me the business?’ Having the numbers helped us approach those questions in a neutral way.”
Sometimes operators are nervous or forget to tell their accountants about changes they make, especially expensive ones. But Dawson emphasizes the importance of having honest conversations and asking questions. When restaurant accountants are involved early in a change, they can help determine the right course, whether it’s for financing new equipment, setting up payroll and POS systems, dealing with ever-changing tax and payroll laws, planning for new locations, and more. Staying in touch with an accountant about these topics can help make it easier for restaurants to save money and have a painless tax season, Dawson says.
Dawson understands, however, that restaurants’ needs vary. Some operators want to have monthly talks or quarterly talks, and others want to be in contact primarily at tax season. Early conversations with an accountant should determine the kind of partnership you want to have, Dawson says.
Restaurant accountants should also be flexible with a client’s choice of accounting software. The right software can allow restaurants to more easily collaborate with accountants, says Lauren Maffeo, a senior content analyst at GetApp, an online resource for information on business software. Contrary to popular belief, software does not effectively enable restaurants to handle accounting by themselves. Rather, it can provide tools to help operators manage and organize their numbers, which accountants can then analyze.
Maffeo recommends that restaurants pick software that allows them to easily track inventory and purchasing so they can better manage their relationships with suppliers. “Accounts payable and receivable, global tax and compliance management, multi-currency support, and customized invoices are additional features that software shoppers should consider,” she says.
Picking the right accounting software is another area in which specialized restaurant accountants can help, Maffeo says. It’s common for accountants to guide clients through the process. They might even be able to provide special pricing, Dawson adds.
From software choice to meeting frequency, the restaurant-accountant relationship should be tailored to individual and industry-specific needs. It’s important for restaurateurs to advocate for their businesses and not try to fit into the molds of other business accounting, Bates says. “When your accountant understands the crazy business and can drive the numbers, it will take a lot of pressure off you. It makes the partnership invaluable.”