You Can Successfully Tackle Your TABC Mixed Beverage Taxes

3 Terrific Tips for Keeping the TABC Happy

You Can Successfully Tackle Your TABC Mixed Beverage Taxes | Tabulate

No matter the size of your establishment or the demographics of your regular customers, you must pay your mixed beverage taxes correctly, or you’ll be in world of trouble with the Texas Alcohol and Beverage Commission (TABC).

If the TABC finds you in violation of those fees, you will face stiff penalties, including:

  • Suspended license
  • Heavy fines
  • Increased bond requirement (up to 4 times your average monthly sales volume)

Tabulate recognizes how difficult tracking your drink taxes can seem, especially to inexperienced owners opening their first Texas restaurant or bar. With over 75 years of experience exclusively with the food service industry, our expert bookkeepers have three tried-and-true tips to help you find success with the TABC.

#1 Track Your Sales Properly

First things first: you need to track liquor, beer, and wine revenue separately. Yes, they are all forms of liquor, but you have to properly remit taxes on the sales of each item. That means accounting for the amount of booze you use for each and every mixed drink by ensuring that your POS system know exactly what goes into every drink on your menu.

That’s the obvious stuff, so what about comps? It’s a little-known fact in our industry that Texas also collects tax on the drinks you give out to your customers as compensation – no matter the reason.

To make sure you quantify and pay these taxes properly, Tabulate always recommends that you code comps in your POS according the item being comped, not according to comp reason.

  • Correct:  Comps labeled as “Comps- Liquor”
  • Incorrect: Comps labeled as “Comps- Bad Service”

This POS configuration is the only way you can ensure your totals add up correctly.

#2 Pay Your Bills on Time, Every Time

You Can Successfully Tackle Your TABC Mixed Beverage Taxes | Tabulate

You must pay your bills to your alcohol distributors by the 10th and the 25th of each calendar month. If your bills are paid even a day late, the distributor can choose to report you to the TABC for non-compliance. And if you get on “The List,” the TABC can make sure that distributors won’t sell to you.

Since the liquor vendors are supposed to turn in customers for non-payment, there is an unwritten grace period that many of them follow. They will often call people directly to request full payment or set up a payment schedule before reporting to the TABC.

All of this means you have to manage your cash flow very carefully.  A good bookkeeper will keep you apprised of your cash flow situation to help you prioritize and pay your bills so you stay out of hot water.

#3 Don’t Think You Can Fly Under the Radar

On average, the TABC will audit each licensed establishment once every 5 years. The state knows exactly how much inventory you have purchased because they get regular reports from all licensed distributors.

So, if you think you can hide, you’re wrong!

Unlike other types of audits, this TABC 5-year audit is a depletion audit. This unique audit gives the TABC permission to guesstimate the revenue you should have made and then assess a tax bill based on that estimate. If you don’t like that tax bill or estimate, you have to prove to the TABC they are wrong, or they are legally allowed to fine you!

If you want to find success with your mixed beverage taxes and the TABC, your Texas restaurant or bar must have clean books and a properly configured POS system. Standing up to TABC levels of scrutiny requires the careful attention to detail that you can only obtain from the professionals at Tabulate. With 75+ years of experience delivering bookkeeping services exclusively for the food service industry, we provide bookkeeping, bill pay, detailed analytics, and financial statements for independent restaurant and bar owners starting at $299/mo.

Contact us today to learn more about how we can help your business!

Increase Your Sales with a Good Holiday Promotion

4 Tips to Help Your Restaurant or Bar End the Year on a High Note

Increase Your Sales with a Good Holiday Promotion | Tabulate

The holiday season can make or break your business. Much like a retail outfit, the 6-8 weeks at the end of the year can account for a substantial portion of your annual sales numbers. From businesses and families holding holiday parties to people needing a meal while they’re out shopping, this is a time of year you and your staff can shine. We’ve assembled 4 recommendations that can guide help restaurant or bar drive up seasonal sales with a successful holiday promotion.

#1 Start Early

This might be the biggest obstacle for restaurants and bars, especially because it’s easy to get in the weeds with day-to-day operations and weekly COGS goals. But if you want your promotion to have any sort of success, you must plan early and often. This is a multiple-step process:

  • Agree upon the idea. Whether it’s a holiday menu, a special night, gift card push, or something else entirely, you must have a clear idea for what you want to do.
  • Set the terms and keep them. Changing things midstream is a recipe for disaster.
  • Be prepared. Make sure you obtain the necessary supplies, produce, and materials in time for the promotion’s start date. And if you’re running a multi-week event, be sure your suppliers won’t run out midway.

The biggest one? You must start talking about your event at least 6 weeks before it starts. That’s right – you must promote your promotion, and you must do it actively. This one is so important it gets its own bullet later.

#2 Be Creative

Increase Your Sales with a Good Holiday Promotion | Tabulate

Unless you’re an established business running a holiday promotion that’s achieved sustained, year-over-year success, you should not attempt a run-of-the-mill promotion. A generic seasonal offer won’t set you apart from your competitors, especially since they’ll probably attempt something to attract increased holiday traffic.

To be clear, this doesn’t have to be a full-court press that dramatically changes the identity of your establishment for 6 weeks out of the year. It could be a single new dish or drink, an event that lasts for a single weekend, or a targeted gift card campaign. The point is to try something interesting, do it well, and track the results.

#3 Prepare Your Business

Increase Your Sales with a Good Holiday Promotion | Tabulate

We referenced this earlier in terms of buying what you need for the promotion well in advance of the event, but you also need to prepare your staff and facilities to ensure success. Your people must become advocates for the promotion, and your POS system must be updated with your holiday special. If not, you’ll lose sales from customers who weren’t pitched the item by their server, and your inventory and costs will be impacted because you’re not tracking ingredients properly.

And for goodness’ sake – if you’re going to have any sort of holiday promotion, please make sure your establishment look like it enjoyed holidays. You don’t have to go “Full Griswold,” but a few decorations and some light holiday music for 4 weeks will go a long way.

#4 Advertise Effectively

Here’s the big one: you must start advertising your holiday promotion at least 6 weeks before it happens. You need time for the details of your event to sink into the consciousness of your potential customer base, especially since many people have jam-packed holiday schedules.

There are several methods you can choose – radio, television, print, social media, direct mail, e-mail, public relations, pay-per-click, and more – but what matters is that you use what’s the most relevant for your audience. The marketing strategy employed by a family-friendly restaurant should be different than the one employed by the hipster-friendly dive bar. Determine the one or two channels that are currently most effective for your establishment, create specific advertisements about your promotion, and make a big push.

Increase Your Sales with a Good Holiday Promotion | Tabulate

Ultimately, a successful holiday promotion will always be more dependent upon execution than ideation. Just like your restaurant in general, you can have the best concept in your neighborhood, but if you can’t realize the idea, that promotion will not work. Take time to create detailed plans so your staff and facilities are set up to exceed expectations – both for your customers and your sales numbers.

Where Does the Money Go in My Restaurant?

Understanding the Cost Breakdown in Your Establishment

Where Does the Money Go in My Restaurant?

No matter the size, shape, or format of your establishment, you must maintain a regular insight into your budget. While this seems fairly obvious, it’s absolutely that you maintain a firm grasp on where, when, and how your money flows.

You must develop a nuanced understanding of your expenses if you want to first break even on your initial investments and then start generating regular profits. Let’s start this discussion by identifying the places your money goes on a regular basis:

  • Rent
  • Marketing
  • Insurance
  • Payroll
  • Taxes
  • Inventory
  • Equipment
  • Bookkeeping
  • Maintenance
  • Supplies
  • Utilities
  • Technology

And this doesn’t even count paying off loans and other expenses related to opening a brand-new establishment. This is just the day-to-day stuff that you’ll see in any average balance sheet or Profit-and-Loss Statement. Luckily, those above items can be lumped into three basic categories:

  • Food and Beverage Costs
  • Labor
  • Operating Costs

What matters most is maintaining a healthy ratio between these three and the profits you should earn if you hope to build and sustain success. Most food service industry experts recommend keeping your Prime Costs (Food + Labor) between 60-65%. You should keep your operating expenses well under 30% if you have any hope of breaking even, much less earning a profit.

Ready to get into the numbers behind your money a bit?

Food and Beverage Costs

This one is straightforward. You have to pay for the materials that you’ll then shape, cook, and prepare into the items you sell. The tricky part is determining how much to sell a dish or drink for compared to what you spent to purchase the components.

In restaurant accounting parlance, this concept is called “Food Cost Percentage.” It’s calculated by dividing the Cost of Food by Total Sales. For example:

  • Your food and beverage sales were $3,000.
  • You spent $1,000 to buy the goods for the items you sold.
  • $1,000 / $3,000 = 0.33 = 33%.

What your establishment sells can directly impact those percentages. Some expensive items will be loss leaders, as it costs you as much to purchase that tasty steak or rare fish as it does to sell it. This can be made up in the sale of beverages and desserts, which historically have much higher margins.

Having a firm grasp on these specifics will help you learn exactly what items you need to push at which times of day. It will be especially helpful if you need to strike a firmer balance on your Food Cost Percentage.

Labor

Unless you’re running a food cart where you’re the only employee, you will have to pay the people who work for you. And even in that instance, paying yourself a salary needs to be tracked separately from your profits.

Labor costs include items like payroll, tips, benefits, and anything else directly related to your employees (including training, but excluding supplies). To determine the Labor Cost Percentage, you divide Labor Costs / Total Sales. Extending our earlier example:

  • Your food and beverage sales were $3,000.
  • You spent $900 on your employees.
  • $900 / $3,000 = 0.3 = 30%.

Labor might be a more pronounced variable cost than food and beverages, because your employees have a voice. While food costs have risen slowly but consistently over the past few years, labor costs have increased at a higher rate. This is especially true when you factor in benefits like health care and the push for higher minimum wages.

Operating Expenses

As you’d imagine, this category comprises everything else in your establishment: rent, overhead, toilet paper, napkins, cutlery, utilities, marketing, your Point-of-Sale system, your bookkeeper, your accountant, and more. However, this is not a place to nickel-and-dime the money you spend in hopes of dramatically cutting costs. For example:

  • Rent might be high, but you might be in a great location that generates more sales than a cheaper place one neighborhood over.
  • Marketing your business is important, especially in the age of the smartphone.
  • Paying your utility bills keeps your doors open.
  • People want to visit a restaurant or bar that’s clean and has a specific aesthetic.

These categories represent a prime opportunity for you to lose track of what’s happening – and quickly. While an individual cost might be small compared to payroll or liquor, you need to keep them collectively under 30%, especially if you’re struggling to keep Prime Costs under 65%.

The Tabulate Difference

Running a restaurant or bar is not all fun and games, despite what Cheers might have taught us in the ‘80s. So, as much as you might objectively love your menu and customers, you’re still operating a business. And that means constantly paying attention to your money.

This is what sets Tabulate apart from its competitors – and your friendly neighborhood accountant. We integrate directly with your POS system to examine your sales, costs, expenses, profits, and margins in great detail. Our job is to crunch your numbers and then provide you with accessible and understandable reports laden with suggestions and recommendations you can use to make your business succeed.

To learn more about what we can do for your establishment – from franchises and high-end restaurants to dive bars, coffee shops, food trucks, and everything in between – visit Tabulate.com today!

What are the Restaurant Accounting Numbers You Need to Know?

7 Timely Terms That Can Make or Break Your Business

What are the Restaurant Accounting Numbers You Need to Know?

Not every restaurateur is an experienced accountant. This is especially true if you’re a chef or bartender trying to get your first establishment off the ground on your own terms. You’ve spent years cultivating the menu and concept of your dreams. Now, you now must learn key restaurant accounting numbers so you can better run a successful business.

With any luck, you’ve found an excellent accountant to help you manage the books, but you also realize the importance of understanding those figures and terms yourself. We suggest learning a few key concepts driving the financial side of the restaurant world. You should be able to decode the reports you receive from your bookkeeper and make good decisions for your business.

#1 Total Sales

This one is a no-brainer. It represents everything you’ve sold to your customers. We recommend reviewing sales from a range of perspectives, including various time frames and types of items sold. Investigating your sales will help you better understand what your customers want and gives insight into the overall trends in your accounting numbers.

#2 Cost of Goods Sold

Known by the acronym COGS, this number represents how much it cost you to create the items you sold. As in, a customer purchased a dish for $10, but you spent $3 on it in terms of food, labor, and related costs. To calculate COGS, add up your Beginning Costs and Purchased Inventory and then subtract your Final Inventory.

#3 Food Cost-to-Sales Ratio

Also known as “Food Cost Percentage,” this gives you a clear metric you can point to regarding your expenses. Recent research states that a healthy restaurant keeps this number around 28 to 35%. You can derive it by dividing your Food Costs by your Total Sales.

#4 Gross Profit

Thanks to a commonly used worksheet called a “Profit and Loss Statement,” it’s easy to see this number in action. It’s simply the result of subtracting Costs from Revenue. It’s also one of the best top-line restaurant accounting numbers to keep in mind at all times.

#5 Prime Costs

Now, we’re getting into the weeds a bit, but this number is a crucial indicator of your financial condition. Prime Costs represent the big items that you regularly spend money on, the stuff you need in any sort of restaurant.

How you manage these expenses compared to your revenue goes a long way toward building a successful establishment. To get this number, simply add together Labor and COGS. And if you want a healthy restaurant, keep prime costs under 60% of your revenue.

#6 Operating Expenses

This broad number considers everything not directly related to what you actually sell in your establishment. It can be grouped into three categories.

  • Labor – Typically the largest expense. It combines payroll, payroll taxes, tips, employee benefits, and anything else involved in paying your entire staff.
  • Overhead – This includes fixed costs like Rent, Insurance, and Property Taxes, but it also includes variable costs like Utilities.
  • Other – An obvious catchall term. It includes nearly everything else that can’t grouped into labor or overhead: forks, spoons, napkins, advertising, and beyond.

As important as your menu is (Why else are people coming to your restaurant, bar, or food truck?), you must keep these costs in mind when creating and maintaining your budget.

#7 Break-Even Point

Finally, we’re at the big one – the number that tells you how much you need to make to cover all your various expenses before you actually make money. That calculation looks like this:

Total Fixed Costs / [(Total Sales – Total Variable Costs) / Total Sales)] = Break-Even

You can use this number in a variety of ways – a benchmark of overall health, a metric toward paying off an investor, a goal you want to reach before making a new investment or purchase, and so much more.

At Tabulate, we understand that not everyone understands these leading restaurant accounting numbers, much less has the experience at navigating them successfully. With our all-in-one back-office solution, you’ll gain access to software where you can view all your reports and financial data on your terms. We also deliver bookkeeping and payroll services from experts with decades of experience working exclusively in the food service industry.

We have plans to meet every budget and business size, from franchises and regional chains to dive bars, food trucks, coffee shops, and everything in between.