--- layout: default_v3 language: default permalink: i18n_link: 9687 updated: 2025-12-11 #--- article key-values ---# collection: default_articles category: accounting-payroll tags: Chart accounts type: article page_id: 9687 hreflang_id: 9687 date_published: 2025-12-01 date_modified: 2025-12-11 #--- javascript schema ---# javascript_schema: - script: jquery_3_2_0_min - script: bootstrap_min - script: article_infinite_scroll - script: article_mix_infinitescroll - script: article_mix - script: article_mix_faq - script: article_mix_toc #--- section schema ---# section_schema: - section: nav-main_menu - section: nav_submenu_iconview_v2 - section: article_body_v2 - section: footer - section: footer-sticky_cta_bar - section: schedule_demo_cta #--- page key-values ---# meta_tags: t_meta_title: How to Build a Restaurant Chart of Accounts t_meta_description: Guide for restaurant owners to create a practical chart of accounts that supports smart decisions on pricing, staffing, spending. t_meta_abstract: Guide for restaurant owners to create a practical chart of accounts that supports smart decisions on pricing, staffing, spending. i_meta_image: og_how-to-build-a-restaurant-chart-of-accounts.png article_body: json-ld_article: v_date_published: 2025-12-01 v_date_modified: 2025-12-11 author: p_author_id: 254 t_author: Derrick McMahon p_author_url: derrick-mcmahon.html i_author: 254.jpg t_author_description: Derrick McMahon is a writer and restaurant technology enthusiast. He holds a Bachelor's degree in Hospitality Management from UNLV, where he developed a passion for the food service industry. p_author_facebook: //www.facebook.com/altametrics/ p_author_twitter: https://twitter.com/https://twitter.com/altametrics?lang=en p_author_linkedin: p_author_instagram: podcast_section: v_links: podcast_links: - t_title: Iheart Radio v_url: i_icon: iheart_radio_icon.png - t_title: Amazon Music v_url: i_icon: amazon_music_icon.png - t_title: Youtube Music v_url: i_icon: youtube_music_icon.png - t_title: Spotify v_url: i_icon: spotify_icon.png feature_snippet: p_type: text t_title: What is a chart of accounts for a restaurant? t_description: A chart of accounts is a list of all the categories you use to record money coming in and going out of your restaurant. It organizes sales, COGS, labor, and expenses so your reports are clear and consistent. content: heading: t_title: How to Build a Restaurant Chart of Accounts t_description: Guide for restaurant owners to create a practical chart of accounts that supports smart decisions on pricing, staffing, spending. image: i_image: chart-of-accounts-1764607333-9868.png t_image_description: v_image_attribution: v_image_license: v_video: paragraphs: - t_headline: Why Every Restaurant Needs a Clear Chart of Accounts t_text: Opening a restaurant is hard enough without feeling lost in the numbers.

Maybe you've looked at your profit and loss report, seen a long list of lines, and thought, "What am I actually looking at?" That confusion usually starts with the chart of accounts.

Your chart of accounts is simply an organized list of all the buckets where your money comes in and goes out - sales, food, labor, rent, supplies, and so on. It's the backbone of your bookkeeping. When it's set up well, you can quickly answer basic questions -

- Are food costs creeping up?
- Is labor in line with sales?
- Which revenue streams are really paying the bills?

When it's messy or random, everything becomes harder - closing the books, working with your accountant, filing taxes, and making daily decisions.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: - t_headline: How a Chart of Accounts Is Organized t_text: To use your chart of accounts with confidence, it helps to understand how it is organized. The good news is that the structure is the same for almost every business, including restaurants.

Most charts of accounts follow five main groups -

1. Assets - What the restaurant owns.

- Cash in the bank
- Inventory (food, beverages, paper goods)
- Equipment and furniture
- Prepaid items like insurance

2. Liabilities - What the restaurant owes.

- Credit card balances
- Vendor bills you have not paid yet
- Sales tax payable
- Loans

3. Equity - Owner's investment and retained profit.

- Money you put into the business
- Profits kept in the business over time

4. Revenue (Sales) - Money coming in.

- Food sales
- Beverage sales
- Delivery and takeout
- Catering or other income

5. Expenses - Money going out.

- Cost of goods sold (COGS) for food and beverages
- Labor costs
- Rent, utilities, marketing, repairs, software, and other overhead

Your balance sheet comes from assets, liabilities, and equity. It shows what you own and what you owe at a point in time. Your profit and loss (P&L) comes from revenue and expenses. It shows whether you made money over a period, such as a month.

When you know which group an account belongs to, reading reports becomes easier. You can see patterns - for example, food inventory is an asset, food purchases go into COGS, and food sales go into revenue. This simple structure is what turns random numbers into a clear picture of your restaurant's financial health.

p_headline_type: h2 image: i_image: how-a-chart-of-accounts-is-organized-1764616218-6469.png t_description: accounting v_attribution: accounting v_license: RLTM48948 callout_text: call_to_action: p_type: purchase t_title: The Smarter Choice for Maximizing Your Financial Potential t_text: Streamline Your Restaurant's Finances with Altametrics! t_button_text: Request a Demo p_button_url: https://altametrics.com/schedule-demo.html p_button_color: FF0000 v_form_id: v_product: altametrics background: type: color i_image: p_video: p_color: 012353 - t_headline: Core Revenue Accounts t_text: Your revenue accounts show where your sales come from. If everything is lumped into one "Sales" line, you miss chances to spot problems or growth. The goal is to break sales into a few clear buckets without making the chart of accounts too long.

For most restaurants, a simple starting point looks like this -

1. Food Sales Dine-In
2. Food Sales Takeout/Delivery
3. Beverage Sales Non-Alcoholic
4. Beverage Sales Alcohol (or split further into beer, wine, liquor if alcohol is a big part of your business)
5. Catering or Events Income (if you offer it)
6. Other Income (such as merchandise or fees)

Separating dine-in from takeout/delivery helps you see how each channel performs. Delivery often has higher packaging costs and third-party fees. If the sales are mixed together, you cannot see if delivery is actually profitable.

Splitting alcoholic and non-alcoholic beverages matters because pour costs and margins are very different. Alcohol usually has better margins than food. When you track these sales separately, you can watch whether your mix is shifting and how that affects profit.

You do not need dozens of revenue accounts. Aim for 5-10 main revenue accounts that reflect how you actually sell. If you add a new revenue stream, such as a subscription meal plan or a food truck, you can add a new account later.

The key is consistency. Once you choose your revenue accounts, make sure your POS categories map to them correctly. When you pull reports each month, you want to see the same lines in the same place. That stability lets you compare months and quickly see if sales by channel or category are moving in the right direction.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: - t_headline: Cost of Goods Sold (COGS) t_text: Cost of Goods Sold (COGS) is one of the most important areas in your chart of accounts. For a restaurant, this is what you spend on the items you sell- food, beverages, and related supplies. If COGS is not organized, it is very hard to control food cost % and beverage cost %.

A simple COGS structure for most restaurants looks like this -

- Food Purchases
- Non-Alcoholic Beverage Purchases
- Beer Purchases
- Wine Purchases
- Liquor Purchases
- Paper and Packaging (to-go containers, napkins, cups, etc.)
- Other Direct Supplies (items used to prepare or serve food, like gloves or skewers)

Breaking out these categories helps you see where money is going. For example, if food cost % suddenly jumps, you can check food purchases without digging through beverage or paper costs. If beverage margins look low, you can compare beer vs. wine vs. liquor purchases and see where the issue might be.

Many owners try to track every small item in total detail, but that usually creates confusion. Instead, focus on clear categories. You can track individual items (like chicken breast or fries) in inventory or recipe tools, while your chart of accounts holds the main buckets.

To use these accounts well, keep a routine -

- Post all vendor invoices to the correct COGS account.
- Do regular inventory counts (monthly at minimum).
- Use the formula - "(Beginning Inventory + Purchases - Ending Inventory) / Sales" to get food or beverage cost %.

When your COGS accounts are set up cleanly, you can spot waste, over-portioning, theft, or price increases faster. This turns your chart of accounts into a practical tool for daily food and beverage control, not just a record for your accountant.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: - t_headline: Labor & Operating Expenses t_text: After COGS, labor is usually your largest cost. How you set up labor accounts in your chart of accounts has a big impact on how useful your reports are.

A simple labor structure looks like this -

- FOH Wages (servers, hosts, bussers, bartenders)
- BOH Wages (cooks, dishwashers, prep)
- Management Salaries
- Payroll Taxes
- Employee Benefits (health insurance, retirement, etc.)

Separating FOH, BOH, and management makes it easier to see where labor pressure is coming from. For example, if sales are flat but FOH wages are climbing, you may need to adjust schedules or review tipping and side work. Payroll taxes and benefits should be tracked as their own lines so you understand the true cost of labor, not just the hourly rate or salary.

Next are your operating expenses, often called overhead. These are the day-to-day costs of keeping the doors open -

- Rent or Occupancy
- Utilities (electricity, gas, water, internet)
- Repairs and Maintenance
- Cleaning and Linen Services
- Marketing and Advertising
- Software and Subscriptions (POS, scheduling, accounting, delivery platforms)
- Licenses, Permits, and Fees
- Insurance
- Office Supplies and Small Equipment

A good rule of thumb is to create separate accounts for any category that is meaningful and recurring. If you look at a cost every month and ask, "Is this too high?", it probably deserves its own account. One-time or very small items can be grouped into a general Miscellaneous account.

To make this structure more useful, many operators track labor % and prime cost % (COGS + labor). For many full-service restaurants, prime cost in the range of about 55-65% of sales is a common target. When your labor and operating expense accounts are set up clearly, these percentages become easy to calculate and monitor, and you can adjust staffing or spending before problems grow.

p_headline_type: h2 image: i_image: labor-operating-expenses-1764616219-1893.png t_description: restaurant accounting v_attribution: restaurant accounting v_license: WERWE4984 callout_text: call_to_action: p_type: purchase t_title: Experience The Benefits of Efficient Financial Management t_text: Take Control of Your Restaurants Finances with Altametrics t_button_text: Book a Demo p_button_url: https://altametrics.com/schedule-demo.html p_button_color: 012353 v_form_id: v_product: altametrics background: type: color i_image: p_video: p_color: 9F2B68 - t_headline: Keeping It Simple t_text: One of the biggest problems with a chart of accounts is letting it grow out of control. Every time someone wants more detail, a new account gets added. After a few years, you can end up with hundreds of accounts that no one really understands.

You do not need that level of detail to run a restaurant well.

For most independent restaurants, a chart of accounts with around 60-100 accounts is plenty. This gives you enough detail to see what is happening without turning your P&L into a long, confusing list.

Here are some simple guidelines -

- Start with broad, clear categories. Separate revenue, COGS, labor, and operating expenses as we described earlier.
- Create accounts for costs you review often. If you look at rent, utilities, COGS categories, FOH/BOH labor, and marketing every month, they each deserve their own account.
- Group very small or rare expenses. Items that are low value and infrequent can go into a "Miscellaneous" or "Other" account, as long as they are not hiding important costs.
- Avoid creating an account for every product. Track detailed items (like each menu ingredient) in your inventory or recipe system, not in the chart of accounts.

When you are unsure whether to add a new account, ask two questions -

1. Will I look at this line regularly to make a decision?
2. Does this need to be separate for tax or reporting reasons?

If the answer is no to both, you can likely group it with an existing account.

Keeping things simple has two big benefits- reports are quicker to read, and your team is less likely to miscode invoices or payroll. A clean, stable chart of accounts makes month-end close smoother and lets you compare results over time without constantly changing the structure. The goal is not perfect detail; the goal is usable information.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: - t_headline: Setting Up Your Restaurant Chart of Accounts t_text: If you are starting from scratch, building a chart of accounts can feel technical. It does not need to be. You can set up a solid structure by following a clear set of steps.

Step 1. List your main revenue streams
Write down how you actually make money - dine-in, takeout, delivery, bar, catering, events, merchandise. Turn each of these into a revenue account (or a small group of accounts). Aim for 5-10 accounts total.

Step 2. List your major cost buckets
Group your costs into -

COGS - food, non-alcoholic beverages, beer, wine, liquor, paper/packaging.
Labor - FOH wages, BOH wages, management, payroll taxes, benefits.
Operating expenses - rent, utilities, marketing, repairs, software, insurance, licenses, cleaning, and so on.

Step 3. Map POS and payroll to these buckets
Look at your POS categories and payroll items. For each one, decide which account it should hit. For example,
"Draft Beer Sales" in the POS maps to "Beer Sales" revenue. "Line Cook Wages" in payroll maps to "BOH Wages." This mapping step is key if you want clean, consistent reports.

Step 4. Create the accounts in your system
Enter the accounts into your accounting software or spreadsheet. Group them under the five main sections - assets, liabilities, equity, revenue, expenses. Give each account a clear, simple name so staff and your bookkeeper can understand it.

Step 5. Test with one month of data
Post one month of sales, invoices, and payroll. Run a P&L and check -

- Are all sales in the right buckets?
- Are COGS and labor showing in the right sections?
- Are any lines unused or duplicated?

Adjust account names or mappings where needed, then leave the structure in place. Consistency over several months will give you cleaner numbers, more reliable labor % and food cost %, and a clearer view of how your restaurant is performing.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: - t_headline: Keeping Your Chart of Accounts Clean Over Time t_text: Setting up your chart of accounts is only the first step. The real value comes from keeping it clean and using it every month.

Build a simple routine -

1. Review your P&L monthly. Look at sales by category, COGS, labor, and prime cost. If a line does not make sense, trace it back to the account.
2. Check for "stray" expenses. Look for items dumped into "Miscellaneous" or the wrong account. Fix the coding and, if needed, update your invoice or payroll mapping so it does not repeat.
3. Merge or deactivate clutter. If you have accounts that are rarely used or duplicate others, merge them or make them inactive. This keeps reports readable.
4. Keep names clear. If you or your manager have to guess what an account means, rename it in simple, direct language.

Your chart of accounts should support better decisions, not just satisfy your accountant. When it is clean, you can quickly see if food cost % is out of range, if labor is creeping up, or if a new revenue stream is worth the effort.

Use Altametrics to Keep Your Numbers Organized
A clean chart of accounts works best when your systems talk to each other. Altametrics helps connect key parts of your operation - sales, labor, and back office - so your data flows into clear, usable reports.

With Altametrics, you can -

- Pull sales data in a structured way that matches your revenue accounts
- Track labor by role and location to support your labor accounts
- Use better data for food, labor, and prime cost decisions

If you want your chart of accounts to drive real control, not extra work, explore how Altametrics can help you by clicking "Schedule a Demo" below.

p_headline_type: h2 image: i_image: t_description: v_attribution: v_license: callout_text: call_to_action: p_type: purchase t_title: The All-in-One Solution! t_text: Streamline Your Franchise Accounting with Altametrics t_button_text: Schedule a Demo p_button_url: https://altametrics.com/schedule-demo.html p_button_color: FF0000 v_form_id: v_product: altametrics background: type: color i_image: p_video: p_color: 012353 event_body: json-ld_event: t_name: Employee Scheduling for Restaurant Managers t_description: Attendees will learn how create excellent schedules. The class teaches managers how to estimate the number of employees they need to staff their locations; how to accurately forecast their customer demand; how to quickly and accuaratly write and communicate schedules to employees; and how to evaluate the accuracy and optimization of their schedules to make adjustments. v_start_date: 2022-08-08 i_image: p_location_name: Altametrics Online Webinar Course p_address: webinar.altametrics.com?site=altametrics v_price: 10.00 t_offer_description: Priority Registration v_registration_url: webinar.altametrics.com?site=altametrics faq: t_faq_title: Frequently Asked Questions faq_ask: - t_question: What are prime costs? t_answer: Most independent restaurants do well with about 60-100 accounts. That is enough detail to manage the business without making reports long and confusing.
- t_question: How many accounts should a small restaurant have? t_answer: Use clear buckets such as -

- Food purchases
- Non-alcoholic beverage purchases
- Beer, wine, liquor purchases
- Paper and packaging

This makes it easier to track food and beverage cost % and spot waste or price changes.
- t_question: How should I structure my COGS accounts? t_answer: Separate -

- FOH wages
- BOH wages
- Management salaries
- Payroll taxes
- Benefits

This helps you see where labor pressure is coming from and calculate a realistic labor %.

- t_question: How should I break out labor in my chart of accounts? t_answer: Prime costs are COGS + labor. For many restaurants, a prime cost around 55-65% of sales is a common target. Your chart of accounts makes it possible to measure this number and control it.
---