Hospitality bookkeeping has a reputation for being messy, and in under-managed operations it earns that reputation. But a properly structured café or restaurant set of books — with daily sales reconciliation, clean COGS tracking, and disciplined payroll — gives the owner the cost data they need to price menus correctly and spot a problem before it becomes a loss. The bookkeeping challenges are real but manageable if addressed systematically from the start.
Daily Sales Reconciliation
A modern restaurant POS system (Square, Lightspeed, Bopple, or similar) produces an end-of-day report showing total sales, split by tender type: cash, EFTPOS, credit card, Afterpay/Zip, delivery platforms. The bookkeeper's first task each day is to reconcile those figures to the bank:
- POS cash sales → physical cash counted, banked same day or next morning
- EFTPOS/card → settlement appears in the bank account one to two business days later
- Delivery platforms (UberEats, DoorDash, Menulog) → net settlements weekly, after deducting platform commission
The daily reconciliation should match to the cent. Unresolved variances — called "overs and shorts" — should be investigated before they accumulate. A pattern of small cash shortfalls in a specific shift can indicate incorrect change-giving, an unrecorded void, or something more serious.
Delivery platform fees deserve their own expense account. Commission rates of 15–35% of the order value are material; burying them in a generic "bank fees" account disguises the true margin on delivery revenue.
GST on Food: The Rules That Catch Every Hospitality Bookkeeper
Australian GST on food is notoriously complex. The general principle — basic food is GST-free, prepared food is taxable — breaks down quickly when you look at a café menu:
- A bottle of water is GST-free
- A cup of coffee is taxable (hot beverage, not basic food)
- A sandwich from the cabinet is taxable (sold in a state ready for consumption)
- Bread sold as a loaf is GST-free
- Cake sold by the slice to eat in is taxable
- The same cake sold as an unsliced whole cake to take home is likely GST-free
The ATO's Schedule 2 to the GST Act defines what is and is not basic food. The practical test for a café: if the food is sold hot, in a ready-to-eat state, or primarily for immediate consumption on the premises, GST applies. If it is unprocessed or packaged for home preparation, it is likely GST-free.
For most cafés, the split is roughly 80–90% taxable (hot drinks, prepared food, dine-in meals) and 10–20% GST-free (retail packaged goods, some grocery-style items). The POS system must be configured to apply the correct GST treatment to each menu item — this is a setup task that the bookkeeper should review annually when menu items are added or changed.
Cost of Goods Sold and Gross Margin
Restaurant and café COGS is typically tracked at the category level: food cost and beverage cost, expressed as a percentage of the corresponding revenue. A well-run café targets a food cost ratio of 28–35% and a beverage cost of 20–28% (coffee margins are high; retail bottled beverages are lower).
To calculate COGS accurately, you need:
- Opening stock value at the start of the period
- Purchases during the period (from invoices, not bank payments — timing matters)
- Closing stock value at the end of the period
COGS = Opening stock + Purchases − Closing stock
Hospitality businesses that skip stocktakes — which is common — cannot calculate a true COGS. They can track purchases, but wastage, theft, and spoilage are invisible without a closing count. Monthly stocktakes are industry best practice for any operation with turnover above $500,000.
Supplier Invoice Management
Hospitality suppliers — produce, meat, dry goods, beverages — typically deliver daily or several times a week. Invoice management can become chaotic without a system. Best practice:
- All deliveries matched to a delivery docket at the point of receipt
- Invoices entered into the accounting system within 24 hours of receipt (or at minimum before the supplier's payment run)
- Credit notes obtained for short-deliveries or damaged goods before payment is processed
- Monthly reconciliation of supplier statements against the accounts payable ledger
The "take the delivery and deal with the invoice later" approach is common in busy kitchens — it results in duplicate payments, uncredited returns, and inflated food cost.
Payroll: Awards, Penalties, and Rostering
Restaurant and café staff are covered primarily by the Restaurant Industry Award or the Fast Food Industry Award, both of which have complex weekend, evening, and public holiday penalty rates. Public holiday rates in hospitality can be 250% of the ordinary rate for casuals.
Key payroll disciplines for hospitality:
- Rostering data from the scheduling system (Deputy, Tanda, or similar) must be reconciled to actual hours before payroll is processed
- Split shifts and broken shifts attract allowances in some Award categories
- Junior rates apply to employees under 21; the correct rate must be applied for each age bracket
- Superannuation accrues on ordinary time earnings — allowances and some penalty components may or may not be OTE depending on the award and the arrangement
Tipping: from 1 July 2023, the Fair Work Act was amended to require employers to pass tips to staff. The ATO treats tips received by the employer on the employee's behalf as wages, subject to PAYG withholding and super (though there is nuance depending on whether the tip is directed by the customer to a specific employee or pooled). Get a ruling from the tax agent on how tips are to be treated before setting up the payroll configuration.
Managing the Lease
Hospitality businesses typically have fit-out costs to amortise and a lease liability to account for under AASB 16 (if reporting under the standard). For small businesses below the threshold for AASB 16 compliance, lease payments are simply an operating expense. Either way, the lease document should be in the client's file, and the expiry date, rent review dates, and make-good obligations should be noted.
Make-good provisions — the obligation to restore the premises to original condition — can be material in hospitality (kitchens require significant restoring). If the provision is quantifiable, it should be accrued over the lease term.
End-of-Period Reconciliation Checklist
Before closing the month:
- Daily sales reconciled to bank for every trading day
- Delivery platform settlements reconciled (weekly settlements often span the month-end)
- All supplier invoices entered, credit notes applied
- Payroll journals posted, PAYG withholding liability balance agrees to payroll system
- Superannuation accrual calculated and posted
- Stocktake values entered; COGS calculated
- Prepaid expenses (insurance, annual maintenance) apportioned
- GST review — confirm POS tax configuration hasn't drifted