Restaurant and cafe Bookkeeping: Wage as a Percentage of Sales

By Sky Accountants

Wages are often one of the largest expenses in any business, therefore it is crucial that wages are benchmarked, controlled and monitored through restaurant and cafe bookkeeping. Without controls, without order and without systems your business will fail.

At a fundamental level a business owner or manager needs to have wages at a set % of sales. Depending on your industry, this per cent could be anywhere from 10% to 40%.

The first step for any proactive manager is to find out what best practice is for his or her particular industry. Our office can help with this. You can see it below as “Labour Budget %.”

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The next step is to determine your weekly average sales. After this, you need to determine what level of staff hours you think you will require given your expected average weekly sales. Once you have determined the staff hours required for the week ahead, you need to cost these hours.

You can use this Roster Coster Calculator to make sure that your wage costs do not exceed your target percentage of sales. For hospitality businesses, wages typically run at about 25% of sales. Wait, bar and game staff often run lower, though. You can also use a specially designed spreadsheet to measure tab income, food sales, bar food sales, bistro sales and so on and break each area down to add all the wages for each area.

By doing this, you can adjust your roster monthly, quarterly, annually and even seasonally. This could also mean hiring casual staff over permanent so check out the different industry award rates.

You can see on this calculator the total sales for the week – let’s say you expect $49,000 of total sales from restaurant and functions sales next week. How many staff hours would you need for your average weekly sales?

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Once you find this out, you can add all your salaried staff for the week on the Salary Staff sheet. Add in their annual salary and hours assumed according to their contracts as well.

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On the Permanent Staff sheet, you can add all your permanent staff that will work the following week. Add in their hours for Monday to Friday, Saturday, Sunday, Public Holiday if any, and their corresponding rates. The calculator will automatically add the totals.

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Do the same for your casual staff on this sheet.

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Once you’re done, you can go back to the Results sheet. Make sure the total hours worked is the same as the staff hours you would need for the week. You can see the total hours worked based on all the hours you input on the salary staff, permanent staff and casual staff sheets. Key in the number of hours your venue will be open for the following week and you will see the average sales per hour and sales per hour open here.

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However, the most important information here is the labour cost percentage. You can see the total staff cost with workers compensation and superannuation of all the salary, permanent and casual staff. Here, your weekly total labour cost is $14,325.72 or 29.2% of your weekly total sales of $49,000. The labour budget that’s set here is 25% so the labour cost exceeded the budget. Your labour cost is over by 4.2% or $2,075.72. In this case, you would need to talk to your area heads so they can cut staff hours or do the necessary adjustments.

Wages should be controlled from the outset and reviewed at least once every quarter through restaurant and café bookkeeping.

Measure KPIs on a weekly basis to make sure your business still has profit after wages. Costing your roster every week will give you a clear understanding of how much each department would spend in wages. If an area goes over the KPI, go to the area head and advise him to cut the casuals or give him a percentage or dollar value that he must cut it back by.

Restaurant and Cafe Bookkeeping

If you have any questions or if you want to use this Roster Coster Calculator, simply email or contact us and we would be happy to help.

Need a bit of assistance with your hospitality business? Contact a Sky Accountants representative today and learn more about our fixed fees. You won’t regret it.

Some of our clients include Buckley’s Entertainment Center, Ballarat Leagues Club, Daylesford Hotel, Bacchus Marsh Golf Club, Campbell Point House, Midlands Ballarat, The Urban Newtown, Maryborough Midland Society, Brink Drinks, Dontek, UV Wraps and many more.

Aside from business consultation, we also offer accounting, restaurant and café bookkeeping, back office, SMSF and POS services designed to help you achieve greater financial success.

 

Email Address: info@skyacc.com.au

Accountants Ballarat Office

Phone: 1300 328 855
Fax: 03 53334430
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Accountants Sunbury Office

Phone: 03 97444522
Fax: 03 97447004
Office Address: Suite 13, Building B, Sunbury Corporate Centre, 33-35 Macedon Street, SUNBURY VIC 3429
Postal Address: PO Box 222 Sunbury, Victoria 3429

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