For a restaurant, accounting for costs can be pretty complicated. There are three important elements to account for costs;
- When was it purchased?
- What is the remaining inventory?
- Which cost category should it be in?
The above elements are important points in determining how you would like the accounting to be handled. It can be done in a simple way or in a more involved way. The more involved it is, the more accurate the financials can be. But also it means higher accounting costs.
Many restaurants will start by using a simple method. The reason is that when restaurants start, the main focus is increasing sales and accounting does not help you raise sales. However, as restaurants grow, there may be an increased need to analyze its cost structure and hire a manager to run the business. At this stage, restaurants may need to change their accounting methods to a more sophisticated one. Even if a restaurant starts with a simple accounting method, it can change to a sophisticated method. This is generally what I recommend.