Restaurants & Food Service
Restaurants run on thin margins. Tipped payroll, daily reconciliation, and food cost tracking to keep your kitchen profitable.
The Industry
Restaurants operate on margins most business owners wouldn’t tolerate. A 5% profit margin is considered good in this industry. Every dollar of revenue gets split between food costs, labor, rent, and operating expenses before anything reaches the bottom line. When protein prices jump 15% or you lose a line cook mid-shift and pay overtime to cover, that narrow margin disappears. You need to know exactly where every dollar goes because there’s no cushion for surprises.
The labor side creates accounting challenges that other industries don’t deal with. Tipped employees require different minimum wage calculations under Massachusetts law. If tips don’t bring a server to minimum wage for a pay period, you make up the difference. Add tip pooling arrangements, split shifts, employees working multiple positions at different rates, and the constant turnover that defines restaurant work, and payroll becomes the most complicated part of running the business. Food trucks handle all of this plus permits across multiple municipalities and commissary compliance tracking.
Who This Covers
Who This Covers
Full-service restaurants, quick service and fast casual operations, cafés and coffee shops, bars and pubs, food trucks and mobile vendors. Any food service business in the Merrimack Valley or Greater Boston dealing with tipped employees, perishable inventory, and thin margins.
What Complicates It
What Complicates It
Tipped wage calculations and tip credit compliance under Massachusetts law. Food costs that shift weekly based on supplier pricing. High-volume daily transactions requiring cash and credit reconciliation. Third-party delivery platforms taking significant commissions. Sales tax on prepared food. High employee turnover requiring constant payroll changes. Seasonal fluctuations throughout the year.
What We Handle
Payroll for restaurants isn’t like payroll for other businesses. We handle tip credit calculations to make sure you’re paying the correct minimum wage when tips fall short. Tip pooling gets tracked and distributed according to your house rules while staying compliant with Massachusetts requirements. Overtime calculations account for split shifts and employees working multiple positions at different rates. When someone doesn’t show up and you call in backup at time-and-a-half, the accounting reflects what actually happened.
Food cost tracking shows you actual percentages by category so you know if protein costs jumped from 28% to 34% before the month closes rather than after. Daily sales get reconciled so you discover cash shortages or credit card discrepancies within days, not weeks. Third-party delivery platforms like DoorDash and Uber Eats require reconciliation against deposits that arrive net of commissions and fees. We separate actual revenue from what those platforms keep so you can see whether delivery adds to the bottom line or subtracts from it.
Payroll and Tip Compliance
Payroll and Tip Compliance
Tipped wage calculations meeting Massachusetts requirements. Tip credit tracking and documentation for each pay period. Tip pool distribution by shift and position. Overtime and split shift pay calculations for employees working multiple roles. Payroll system setup designed for restaurant pay structures. W-2 preparation with proper tip income reporting.
Food Cost and Daily Reconciliation
Food Cost and Daily Reconciliation
COGS tracking by category showing protein, produce, beverage, and supply costs as percentages of revenue. Daily POS reconciliation catching cash and credit discrepancies early. Third-party delivery platform reconciliation separating gross revenue from commission fees. Sales tax compliance and meals tax filings for Massachusetts locations.
What Goes Wrong
Restaurants that don’t track food costs properly think they’re making money when they’re not. Menu prices get set based on what competitors charge or what feels right. Food costs run 38% when they should be 30% and nobody notices until cash runs short. Waste goes unmonitored. Theft happens slowly. A $50,000 annual loss shows up as general financial tightness rather than a specific problem you can fix because the books never revealed where the money actually went.
Tipped employee payroll creates liability when handled incorrectly. Massachusetts requires that if tips don’t bring a server to minimum wage, you make up the difference. Without proper tracking, some pay periods slip through where employees earned less than minimum wage and nobody caught it. That becomes a wage claim or a Department of Labor issue years later. Third-party delivery deposits hit the bank and get recorded as revenue, but nobody backs out the 25% commission. Revenue looks higher than it is and you can’t figure out why profits don’t match what the top line suggests.
Food Costs Hidden in the Noise
Food Costs Hidden in the Noise
Menu prices set by feel rather than actual ingredient costs. Waste and spoilage not tracked so you can’t measure shrinkage. Vendor price increases absorbed without adjusting menu prices. A restaurant doing $800,000 in revenue with food costs running 8 points too high loses $64,000 annually without a clear line item showing the problem.
Payroll Compliance Gaps
Payroll Compliance Gaps
Tip credit calculations done manually or skipped entirely. No documentation showing servers earned minimum wage each pay period. Overtime calculations that don’t account for multiple pay rates or split shifts. These gaps create exposure that surfaces during audits or employee complaints years after the fact when records are hard to reconstruct.
What Changes
Food costs become visible and manageable. You know your actual percentages by category each month and can adjust purchasing or menu prices before small overages compound into large losses. When a supplier raises prices, you see it in the numbers and respond accordingly. Waste tracking shows where product disappears so you can address portions, storage, or theft directly. Menu engineering becomes possible when you know the actual cost per dish rather than relying on estimates from when you opened.
Payroll runs cleanly with proper tip credit documentation. If someone ever questions whether employees were paid correctly, you have records showing tip income, shortfall calculations, and wage adjustments by pay period. Quarterly estimates account for the seasonality that affects most restaurants in the Greater Boston area. Tax preparation captures depreciation on kitchen equipment, leasehold improvements, and the ordinary expenses that add up over the year. When you’re ready to open a second location or approach a bank for equipment financing, the financial statements show a real picture of the business.
Operational Clarity
Operational Clarity
Monthly food cost reports showing actual percentages versus targets. Waste and variance tracking that identifies specific problem areas rather than general shortfalls. Third-party delivery profitability analysis showing whether each platform adds to the bottom line or takes from it. Menu pricing decisions based on real cost data instead of competitor pricing or intuition.
Clean Compliance and Growth Readiness
Clean Compliance and Growth Readiness
Tip credit and payroll documentation meeting Massachusetts requirements with records to support every pay period. Sales tax filed correctly and on time. Financial statements that banks and landlords trust when you’re ready to expand or renegotiate a lease. Seasonal cash flow forecasting so slow winter months don’t catch you short on payroll.
The Merrimack Valley's Trusted Accounting Partner
The Next Step:
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