Bookkeeping for Cafes & Restaurants: Managing Daily Transactions

The Hospitality Bookkeeping Challenge

Cafes and restaurants have a unique bookkeeping challenge: high transaction volumes combined with thin profit margins. A typical cafe processes 100-300 transactions per day across multiple payment methods. Miss a few here and there, and your financial picture quickly becomes unreliable.

The average net profit margin for a cafe is 5-8%. In a business that tight, knowing your exact costs is the difference between surviving and thriving.

Setting Up Your Chart of Accounts

Hospitality businesses need more granular expense tracking than most industries:

Revenue:

• Dine-in Sales
• Takeaway Sales
• Delivery Platform Sales (Uber Eats, DoorDash, Menulog)
• Catering Revenue

Cost of Goods Sold (COGS):

• Food Purchases
• Beverage Purchases (non-alcohol)
• Alcohol Purchases
• Packaging and Disposables

Operating Expenses:

• Wages and Salaries
• Superannuation
• Rent and Outgoings
• Utilities
• Equipment Maintenance
• Cleaning Supplies
• Marketing and Promotions
• Delivery Platform Commissions
• Insurance
• Licences and Permits

POS Reconciliation

Daily Cash-Up

Your POS system records every sale. Your bank account records every deposit. These two numbers should match. When they do not, you need to find out why.

End of day process:

1. Run the Z-report (end-of-day summary) from your POS
2. Count the physical cash in the till
3. Compare POS total to cash count plus card settlements
4. Record any discrepancies
5. Prepare the bank deposit

Connecting POS to Xero

Most modern POS systems (Square, Lightspeed, Kounta) integrate directly with Xero. Set up the integration so daily sales summaries flow into your accounts automatically. This eliminates manual entry of sales data.

The integration should create a daily summary entry showing:

• Total sales by payment method (cash, card, delivery platform)
• GST collected
• Tips received (if applicable)

Card Settlement Timing

Card payments typically settle into your bank account 1-2 business days after the transaction. This creates a timing difference between your POS report and your bank statement. This is normal - do not try to force these to match on the same day.

Food Cost Management

Food cost is your largest controllable expense. The target food cost for most cafes is 28-35% of revenue. Restaurants serving alcohol typically aim for 30-35% food cost and 20-25% beverage cost.

Calculating Food Cost Percentage

Food Cost % = (Beginning Inventory + Purchases - Ending Inventory) / Food Sales x 100

Weekly Inventory Counts

Count your key inventory items weekly: proteins, dairy, and your highest-cost ingredients. This takes 30 minutes and gives you early warning if food costs are creeping up.

Tracking Waste

Record food waste separately. Knowing that you threw away $200 worth of avocados this week is actionable information. It tells you to order less, change your prep schedule, or adjust your menu.

Supplier Payment Management

Most food suppliers offer 7-14 day payment terms. Track these carefully in your accounts payable. Paying suppliers late damages relationships. Paying them early when your cash flow is tight hurts you.

Staff and Payroll

Labour is typically 30-35% of revenue for a cafe. Managing it correctly requires:

Award Compliance

Hospitality workers are covered by the Restaurant Industry Award 2020. This includes:

• Base rates that vary by classification (intro, level 1-6)
• Penalty rates for weekends, public holidays, and late nights
• Casual loading of 25%
• Minimum shift lengths

Payroll Integration

Use a payroll system that integrates with Xero. Xero Payroll or an integration with Employment Hero, Deputy, or Tanda will handle award interpretation and STP reporting.

Tip Management

If your business receives tips, you need a clear policy on how they are distributed. Tips that go directly to staff are not your income. Tips that go through the business need to be recorded as income and then distributed as a payment to staff.

Rostering and Labour Cost Tracking

Your roster is a financial document. Tools like Deputy or Planday not only schedule shifts but calculate the projected labour cost before the week starts. If your projected labour cost exceeds 35% of expected revenue, adjust the roster.

Delivery Platform Accounting

Uber Eats, DoorDash, and Menulog have complicated fee structures:

• Commission: 25-35% of order value
• Menu markup: You may charge higher prices on platforms
• Promotions: Platforms may fund discounts that affect your revenue
• Settlement timing: Weekly or fortnightly payments

Recording Delivery Sales

Record the gross sale amount as revenue, then record the commission as an expense. Do not record just the net amount - you need the full picture to understand your margins.

Tracking Platform Profitability

A $30 meal ordered through Uber Eats might generate only $20 after commission. Add food cost of $9 and packaging of $2, and your margin is $9 - just 30% of the gross sale. Compare this to a dine-in sale of the same meal where your margin is $21 (70%).

This analysis helps you decide how much to invest in each channel.

Cash Management

Cafes handle more cash than most businesses. This creates both opportunity and risk:

Cash Controls

• Count the till at the start and end of every shift
• Two people should verify the count
• Bank cash daily or every second day
• Never use cash from the till for business purchases - always use the bank card or petty cash
• Investigate discrepancies immediately

Petty Cash

Keep a small petty cash float (typically $200-500) for small purchases. Every withdrawal requires a receipt and a recorded purpose. Reconcile petty cash weekly.

Monthly Review Process

At month-end, review:

1. Revenue per day - Are weekday and weekend trends consistent?
2. Food cost percentage - Is it within your 28-35% target?
3. Labour cost percentage - Is it within your 30-35% target?
4. Utility costs - Any unexpected spikes?
5. Delivery platform margins - Are they profitable?
6. Cash discrepancies - Any patterns in shortages?

These six numbers tell you almost everything you need to know about your business health. If food cost and labour cost are on target and revenue is growing, you are in a strong position.

Automated bookkeeping tools like SortBooks handle the daily categorisation of your hundreds of transactions so that these monthly reviews are based on accurate, complete data rather than estimates and guesswork.