Reviewed and updated October 16, 2026
Measure ingredients consistently
Create an item list with purchasing units, count units and recipe quantities that agree. A case, pound and serving are different measurements; inconsistent conversions can make a food-cost report misleading. Record invoice prices and vendor credits before analyzing changes in margins.
Use a repeatable count schedule and assign responsibility for reviewing adjustments. Keep spoilage, staff meals and transfers visible so unexplained differences do not disappear into a single expense account.
Connect counts to cost of goods sold
A basic inventory calculation starts with beginning inventory, adds purchases and subtracts ending inventory to determine cost of goods sold, with appropriate adjustments. Tax accounting methods and inventory exceptions require review; software settings do not independently establish the correct tax method.
Compare theoretical ingredient usage from recipes with actual usage. Differences can reveal portioning, purchasing or record-entry problems. Treat these reports as investigation tools, not proof of theft or a guaranteed savings estimate.
Reconcile sales and close the month
Match point-of-sale totals to processor settlements and bank deposits. Separate sales tax, tips, delivery commissions, refunds and chargebacks. A net deposit from a delivery platform is not automatically the same as gross restaurant revenue.
At month-end, review food cost, labor cost and operating profit together. Keep a record of changes in menu pricing and ingredient costs. When evaluating software, prioritize exportable reports, permissions and an audit trail that supports your accounting workflow. Bring inventory summaries and reconciliation differences to your bookkeeping review so the financial statements reflect how the restaurant actually operates.
Official sources
This guide provides general information. The rules depend on the tax year, jurisdiction and your circumstances. Ask our team which filing or planning steps apply to you.
