Bar profit margins are around 5–10%, while restaurant profit margins dip lower.
That means for bars and restaurants to make or boost profit, they gotta keep a watchful eye on the little things. Like all your restaurant KPIs.
It’s those fractions of percentages gained and lost in the dark corners of your restaurant balance sheet that make the difference. They add up.
The only way to keep tabs on them is by consistently conducting internal financial audits.
Because what may amount to the least exciting part of your job may very well be the most important.
Internal Audit of Restaurant: Parts
A financial internal restaurant audit is the act of making sure all your important financial reports are in order. Let’s take a look at each part of a restaurant financial audit checklist to familiarize ourselves.
Then, in the below section, you can download our free internal audit checklist for restaurants.
You should complete your restaurant profit and loss statement. You should also ensure its accuracy. And its inclusion of all relevant categories and subcategories. You'll need to make sure you've calculated the correct restaurant break even point or you could be losing money.
Daily Sales Reports
Pulling daily sales reports is easy with a bar inventory software like BinWise Pro. With a click of a button, BinWise’s SmartView Report shows exactly what you sold, when, and for how much.
Weekly Inventory Counts
Here’s another easy win if you’re using an automated perpetual inventory system. Because if you are, your inventory is always done. It’s in a perpetual state of doneness. If you take a physical count of inventory, though, you’ll need to make sure your inventory is completed. And accurate.
Labor Cost Percentage
Pull labor cost from your restaurant accounting software or payroll software. Then calculate and record its ratio compared to total revenue. Finally, make sure it matches the labor payouts in your profit and loss statement.
Any products rung up in restaurant or bar POS systems that were voided or removed should be reviewed for accuracy. They should also be checked with any managers-on-duty who approved them.
Keeping these in front of management is a good way to reinforce how scarce they should be. It’s always good that floor managers are aware voids are reviewed.
Production and Waste Records
Food waste is huge in American bars and restaurants. Over 84% of unused food is thrown out, according to the Food Waste Reduction Alliance.
Beyond the societal implications, it’s a bad sign for the financial health of your restaurant too. Throwing out raw material is not ideal.
Review your kitchen’s waste logs. Compare them against typical production and historical waste. Have your chefs sign off on it.
All invoices should be reviewed and reconciled. That means supplier invoices are paid in full or scheduled to be paid if on a net 30 structure. Invoices should also be kept safe for future reference.
The easiest way to handle invoices is connecting your inventory platform to invoice creation and storage. Imagine an inventory system that places orders and allows you to upload supplier invoices directly into your accounting system. Well, stop imagining and get excited. Because that’s what BinWise Pro does.
Bank Statements and Deposits Align with Sales
Any bank deposits, withdrawals, and statements should match recorded sales and expenses.
Accruals Settled and Expenses Paid
Any accrued expenses should be paid out prior to (and be reflected in) your P&L statement. To learn more about accrual, check out our post on restaurant accounting.
Safe Counts Complete and Balanced
Count any cash-on-hand, in safes or other vessels. Check against sales and expenses.
Tax Remittance Complete
Bars and restaurants pay federal income, payroll, tip, health, and local taxes. The schedule for payment and percentage varies. Consult a tax professional if you’re not sure what or whom you owe. Regardless, make sure any applicable tax remittances are completed.
Restaurant Sales Tax Audit
One thing to note about tax auditing, is that sales tax is a unique beast that needs to be taken seriously. The sales tax that you pay will depend entirely on the state and city you operate in. You may not even have a sales tax in your region. If there, you need to make sure that it comes out of every order. This should be done automatically through your POS system, but it's worth occasionally auditing your receipts to make sure. Trust us, you don't want the IRS being the ones who find an error.
Free Internal Audit Checklist for Restaurants
Now that the introduction is made, let’s get to the exciting part: downloading our restaurant audit checklist template.
Here’s a free, downloadable internal audit checklist for restaurants to follow for financial audits. Just click the image below.
Financial Audit Questionnaire
In addition to a checklist, it may be worth drafting up a financial audit questionnaire for your team. Use the template above to reword the checklist into a set of questions you can have your staff go through at the end of each day, week, or month. Ask things like, "Did you reconcile receipts with the actual cash on hand?" and "Did you over- or under-pour today?" Take the time to think about how each staff member affects your financial position and create a questionnaire that helps to remind them to stay on top of things every day.
Restaurant Audit: How Often?
Your bar or restaurant should conduct a full financial restaurant audit once a month, religiously. The only way financial reporting and oversight is useful is if it’s done consistently. That’s how you benchmark against past results and measure improvements.
It’s easier to fill out all your restaurant financial audit checklist fields when all the data is at your fingertips.
That’s where bar inventory software like BinWise Pro comes in. It tracks inventory in real-time, so it’s always up-to-date and accurate.
It can then leverage that inventory data to generate a whole host of numbers you’ll need for your restaurant financial audit checklist. And for your restaurant chart of accounts. Your sales, historic sales, variance, inventory usage, COGS, invoices, and more are all easy to get with BinWise Pro.
Book a demo and we’ll show you just how easy.