The hospitality industry leader at bgr CPAs explains the four practices that all restaurant managers should consider implementing to help combat financial challenges that are common within the hospitality industry.
Throughout this series, our hospitality industry leader at bgr CPAs has discussed the benefits of implementing three managerial practices: establishing four-week periods,conducting routine menu costing and holding weekly P&L meetings are beneficial to improving overall performance of the restaurant. Internal control reviews are essential to protecting the business during daily operations and over extended periods of time.
In 2015, the National Restaurant Association reported that independent restaurant owners lost between four and five percent of annual revenues due to theft or fraud. So, an average restaurant with two million in gross sales may lose between $80,000 – 100,000 as a result of fraud. We can assume that: the weaker the control environment, the greater the possibility that the loss percentage will be higher. How often has the neighbor being interviewed after a tragic event been quoted, “We were shocked! He (or she) was always quiet. They were the last person I expected would do something like this.” Fraud is quite often committed by the last person you would expect. And it is truly tragic for a hard working business owner to lose $80,000 – 100,000 (each year!).
It can become exceedingly easy for theft and fraud to continue over extended periods of time when managers are not meticulous about internal controls. As new and improved methods of committing these acts are always evolving, and because of the effect that theft and fraud has on the financial performance of a restaurant, it is essential that managers implement and continually reevaluate their internal control system.
While it may seem as though there are many factors that can weaken an internal control system, restauranteurs do not have to undertake the process of implementing or improving their system alone. bgr CPAs has vast experience in helping restauranteurs to establish and update written accounting and control procedures, and can advise managers and lead staff on how to best improve existing systems and make employees aware of the control environment. Our professionals have helped clients within the hospitality industry throughout the Mid-Atlantic region. We have assisted restaurants with their tax, accounting, and business needs. To learn more, please contact Stephen Wolf, CPA at firstname.lastname@example.org (410) 418-4400.