Restaurant Accounting: Control, Survival and Profit in 2025

2024 was a real test of endurance for the restaurant business. While guests used to spend money easily, now every hryvnia counts. The war and inflation have hit consumers’ pockets hard, and the restaurant’s costs have almost doubled. In such circumstances, strict accounting control is not bureaucracy, but a matter of survival.

In this article, we, the BRG team with many years of experience in the restaurant market, will tell you how to set up accounting to stay afloat and make a profit. We will speak in simple language, with practical examples and real cases.

Guests are saving money: why strict cost control is needed now

Guests are now more cautious in their spending. Many are cutting back on dining out or ordering more modest menus. The reason for this is a decrease in the purchasing power of the population due to the economic pressure of war and crisis. For restaurants, this means less income, while bills for rent, food and utilities are only growing.

According to a Poster study, in 2023, the average check in Ukrainian restaurants grew by 18%, but largely due to inflation. In other words, guests pay more, not because they buy more, but because everything has become more expensive.

In such conditions, profits are melting away. More than half of restaurateurs admitted that the profitability of their business in 2023 was only 10-20%, and 13% of respondents did not make any profit at all. These are alarming figures: it is impossible to break even or lose money for a long time. Therefore, controlling costs is a matter of life or death for an institution.

Direct and indirect accounting: what the owner should know

First of all, let’s understand the concepts. Direct costs are those that directly depend on the number of guests and orders. This includes, first of all, the cost of food: food, drinks, packaging for delivery, sauces – everything that is served on the table or given to the guest.

Indirect costs (also called overhead or fixed costs) are expenses that exist regardless of how many guests come on a given day. You pay rent even on days when there are no visitors. This includes salaries for administration, security, accountant, utilities, internet, etc.

For a restaurant owner, it is important to know two things:

1. Your break-even threshold. This is the minimum turnover per month (or the number of guests/checks per day) that will cover all fixed costs. Simply put, how much you need to sell to pay for rent, utilities, and basic salaries.
2. The cost of each dish. The owner must clearly understand how many hryvnias of direct costs are included in each menu item. This is achieved through detailed technical cards — more about them below.

A common mistake of restaurateurs is to focus only on food and not pay attention to overhead costs, or vice versa, to cut everything without considering the impact on the quality of dishes.

Management accounting: controlling efficiency and marginal profit

Management accounting is a system of calculations and reports for internal use. Unlike purely accounting for the tax authorities, management accounting “for yourself” provides answers to questions: Where is our bottleneck? What eats into our profits the most? What dish is the least profitable?

One of the main concepts here is marginal profit. Marginal profit (or margin) is the difference between the price of a dish and its direct cost. Simply put: how much we earn from each unit sold before deducting the total costs. For example, if the marginal profit from a Four Cheese pizza is 60 UAH, and from a steak is 40 UAH, then you earn less from each steak, even though its price is higher.

Through management accounting, the owner controls key efficiency points, for example:

• Food Cost — the percentage of food costs relative to income. Usually, the food cost of a full-service restaurant is kept within 25-40%. If yours is 50% or more, you will have almost no profit left, so you need to look for the reasons. Perhaps the cooking technology is broken or there are a lot of write-offs and thefts, or maybe the menu prices are too low.
• Labor Cost is the cost of staff. This includes salaries of cooks, waiters, administrators, payroll taxes. Labor cost is usually calculated in relation to income. The optimal level of Labor cost depends on the concept of the establishment, but in general, it is advisable to keep it within 20-25%.
• Prime Cost is actually food cost + labor cost, i.e. the main costs of producing dishes. Prime cost shows what share of revenue goes to the main variable costs of the restaurant. In the world practice, it is believed that the prime cost should not exceed ~60-65% of sales.

Accounting of raw materials: program, calculation card, write-off mechanism

To keep the food service on track, you need an ironclad discipline of raw material accounting. Every gram of product must either work on the guest’s plate or be written off for a clear reason. Here are the tools that you can’t do without nowadays:

• Warehouse inventory accounting program. Keeping a warehouse “in your head” or on paper in 2025 is an unacceptable luxury. There are affordable restaurant automation systems, such as Poster, that track product balances in real time. This is called the technical card write-off mechanism.
• Calculation cards (technical cards). For each dish on the menu, a costing card should be drawn up – a document that contains the recipe with the exact rates of product layout and the output of the dish. The costing card is linked to the purchase prices of these products and allows you to calculate the cost of one serving.

Tip: review the costing cards regularly. If raw material prices rise, update the cost price and adjust the selling price if necessary. Involve a technologist, a chef, and a commodity accountant in checking the cards.

• Write-off mechanism and loss control. In an ideal world, there would be no write-offs — all the products went into dishes and was sold. But in reality, losses are inevitable: something spoiled, something broke, something was under-delivered, something was over-salted and thrown away. It’s important to set an acceptable percentage of write-offs and strictly account for what is written off. Let’s say you decide that write-offs should not exceed 1-2% of the kitchen’s turnover, then analyze weekly/monthly: how much was written off and why.

Once you set up the system once (or contact a specialist, such as BRG, to set it up for you), you will lay the foundation for monitoring all subsequent indicators.

Re-accounting as a way to identify hidden losses

Sometimes everything looks good on paper: 100 servings were sold, 10 kg of meat was purchased, and there are no write-offs. But in fact, the warehouse is empty, and it is not known where the other 2 kg of meat went. The only way to detect such discrepancies is through regular re-accounting.

A recount is an inventory, a reconciliation of actual balances with accounting data. We recommend that you do a full recount of raw materials every month.

You count all the products physically and compare them with what should be in the program. The result will show whether there are overages or shortages. Recounting is necessary not only for food in the kitchen. Don’t forget to keep track of dishes, utensils, and packaging materials. One dropped glass for 100 UAH is a trifle, but if 20 glasses are broken every month, it’s 24 thousand UAH in a year. Count napkins, boxes, bags, etc. in the same way.

Business expenses: nomenclature control and standards

In addition to food and salaries, there is another expense item in a restaurant that often remains in the shadows — the so-called business expenses. This means all the “little things” necessary for the daily operation of the establishment: detergents, sponges, napkins, toilet paper, candles, disposable gloves, light bulbs, etc. At first glance, the amounts involved are small, but that’s why it’s easy to let them go unchecked.

How to keep them under control? First of all, set standards. Experience shows that business expenses can be planned with reference to the volume of work of the establishment. For example, in a medium-sized restaurant, a normal level of business expenses is ~10-12 UAH per guest or ~1.5% of the bill. Your task is to fit into this percentage.

Approve the list of everything purchased for business needs and the responsible persons. It is also worth keeping track of the balances of household goods in the warehouse. Keep a small stock and replenish it as needed so that money is not dead weight in the form of a year’s worth of powder. Remember that 1% of saved costs is +1% to your profit, especially in these times of low margins.

Is a 300% base margin a panacea or an illusion?

Many restaurant owners think this way: we put a 300% markup on dishes, so we will definitely make money. Indeed, it is a common practice to set a price three to four times higher than the cost of production. At first glance, the margin is huge. But then why are there restaurants with such margins that still barely make ends meet?

There are several reasons. First, the margin does not equal profit. Out of the 300% that you have charged, a significant part will go to cover all other expenses: salaries, rent, advertising, etc. If these costs are high, they will eat into your margin. Second, not all dishes sell equally. Perhaps you have 30 items on your menu with a 300% markup, but your best sellers are drinks or steaks with a lower markup.

There is another point: discounts and promotions actually reduce your margin. If you gave a 10% discount to a guest, it means that the 300% markup turned into 270%. Or you launched a delivery service through an aggregator — give another 30-40% of the commission to the delivery service, and now you have a miserable 5% of your earnings left over.

A 300% markup is not bad, but it does not guarantee success. Your task is to reach the required percentage of net profit, not just keep the margin high. You can set a 500% markup, but if the cost of production is uncontrollable or sales are low, it will be useless. It’s better to strive for an optimal balance: food cost + labor cost + other expenses + profit = 100%. 

The role of a technologist, consulting and external audit from BRG

The restaurant business is a multifaceted business. The owner cannot always dive deep into all the nuances of accounting — and he shouldn’t have to. That’s why there are specialized specialists and consultants who can help put your finances in order.

A competent technologist will calculate each dish, select the right ingredients and grams so that both the taste is on point and the costs are justified. Or they will tell you how to use leftovers to your advantage.

An external audit from a consulting company is a fresh outsider’s view that sees what the owner’s “blurry eye” may not notice. BRG specialists, having experience in managing their own successful establishments, can conduct a comprehensive audit of your restaurant:

• check the cooking technology,
• analyze financial reports,
• compare your performance with market benchmarks.

As a result, you get a report with the problems found and specific recommendations.

External consultants can also train your team in modern accounting methods and set up a management accounting system from scratch if you don’t have one.

Case study: calculating the cost of a New York cheesecake

Finally, the promised practical case from life. Let’s look at how to calculate the full cost of a popular dessert to understand what components make up the cost. Let’s take New York cheesecake, a classic creamy shortbread cheesecake. Let’s say we are preparing a whole cake with a diameter of ~24 cm, which we will then cut into portions.

Ingredients: shortbread cookies 300 g, butter 100 g, cream cheese 600 g, sugar 150 g, eggs 3 pcs, cream 30% — 200 ml. In addition, you need electricity for baking and the pastry chef’s time.

Let’s go calculate the costs:

1. Products: let’s say we buy quality ingredients in bulk. Cream cheese costs 250 UAH/kg, so 600 g of it is ~150 UAH. Cream — 200 UAH for 1 liter, 200 ml for a cake ~ 40 UAH. Biscuits — 120 UAH/kg, 300 g ~ 36 UAH. Butter — 660 UAH/kg, 100 g ~ 66 UAH. Sugar — 30 UAH/kg, 150 g ~ 5 UAH. Eggs — 8 UAH/each, 3 pcs ~ 24 UAH. The total cost of food is about 321 UAH.
2. Electricity: the cheesecake is baked for about 1 hour at 150°C. The oven consumes, say, 5 kWh. The electricity tariff for business is, let’s say, ~12 UAH/kWh. So baking one cake costs about 60 UAH.
3. Labor costs: preparing the base, mixing the cream, and baking take about 1.5 hours. If the pastry chef’s rate is ~120 UAH/hour, then 180 UAH for making a cake.

Now let’s add it all up: the total cost of a whole cheesecake is ~561 UAH (321 products + 60 electricity + 180 labor). The result is 8 servings of dessert, so the cost of one serving is ~70 UAH.

And now the most interesting thing is the price on the menu.

Let’s say we sell one piece of cheesecake for 160 UAH. This means a markup of 129% on the cost price. It would seem that the margin is very high — ~56%. But don’t forget: out of these 160 UAH, you still have to pay the waiter’s salary, maintain the hall, cover the rent, etc. In reality, the net profit from one piece can be, for example, 40 UAH (about 25%).

In conclusion: profitability is real!

We went through the main accounting points that affect the survival and profit of a restaurant in 2025. Sometimes it looks complicated: so many numbers, reports, and control. But believe me, competent accounting is your ally. It will show you where you are losing money and where you are under-earning, and show you the way to optimize. The restaurant business always combines creativity and math. And if your culinary creativity is fine, we are ready to help you with math.

BRG, as an experienced player in the restaurant market, supports fellow restaurateurs on their way to systemic profitability. We can become your partner in setting up accounting and control: implement modern programs, train your team, conduct an independent cost audit, and find hidden reserves. Our goal is for your establishment to not only survive hard times, but to confidently turn from a “minus” to a plus and earn steadily.

Do not hesitate to contact BRG for advice or assistance. Together, we will make every penny work for you, and your restaurant will have a solid foundation for growth even in turbulent times.

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