How do I track beverage costs separately from food costs?
Beverage costs and food costs have completely different margin profiles. Bars and drink programs often run 70-80% gross margins while food margins hover around 30-35%. When you track them together, you can’t tell if your drink menu is subsidizing a food program that’s losing money or if both are performing well.
Set up separate cost of goods sold accounts in your chart of accounts. At minimum, create Food COGS and Beverage COGS. Some restaurants break beverage down further into Liquor COGS, Beer COGS, Wine COGS, and Non-Alcoholic Beverage COGS. How detailed you go depends on whether you’ll actually use the granular data to make decisions.
The real work happens when you enter purchases. Every invoice from a vendor needs to be coded to the correct category. Sysco deliveries go to food. Your liquor distributor invoices go to beverage. This takes discipline, but it’s the only way the numbers mean anything at the end of the month.
The tricky part is vendors who sell both. Restaurant supply distributors often carry bar supplies, cleaning products, and to-go containers alongside food items. When you get a mixed invoice, split it into separate line items coded to the correct accounts. A $1,200 invoice might become $950 to Food COGS, $180 to Beverage COGS, and $70 to cleaning supplies. Takes an extra minute when entering the bill but gives you accurate data.
Track non-alcoholic beverages as beverage, not food. Soft drinks, coffee, and tea have beverage-like margins and belong in that category. Mixers used in cocktails should be beverage costs too.
Once you have clean data, run reports comparing your food cost percentage to food sales percentage and do the same for beverages. If food sales are 60% of revenue but food costs are 75% of total COGS, your food program is dragging down the business even if overall margins look acceptable. That’s information you can act on.
A bookkeeper near Gentry who understands restaurant accounting can set up your chart of accounts correctly from the start and train you or your staff on coding invoices properly. The setup takes a few hours. The insight you get every month is worth far more than that initial investment.
Northwest Arkansas's Dedicated Bookkeeping Partner
The Next Step:
A Quick Conversation
Tell us about your business and where you need help. We'll listen, ask a few questions, and give you a clear plan and honest price.
More Questions
What financial reports should contractors review monthly?
Job cost reports are the most important because they show profitability by project, not just overall. Beyond that, review your profit and loss, cash flow position, accounts receivable aging, and accounts payable aging every month.
Read answerAre there bookkeepers in Bentonville who work with contractors?
Yes. Several bookkeepers in the Bentonville and Northwest Arkansas area specialize in contractor accounting. The key is finding someone who understands job costing, subcontractor tracking, and construction cash flow.
Read answerHow do I handle material costs that fluctuate between jobs?
Track actual material costs to each job as you purchase them rather than using averages or estimates. Record real prices in your accounting software and assign every purchase to the specific project where materials were used.
Read answerHow do I track parts inventory for my auto shop?
Track parts by recording every purchase and every usage against specific jobs in your shop management or accounting software. Do physical counts monthly to catch discrepancies, and monitor your parts margin to make sure nothing is leaking.
Read answerWhat does a bookkeeper actually do for a small business?
A bookkeeper handles day-to-day financial record-keeping including transaction categorization, bank reconciliation, and financial statement preparation. The work keeps your books accurate and tax-ready so you can focus on running your business.
Read answerCan a bookkeeper help me with taxes?
A bookkeeper prepares the foundation that makes tax season manageable. They keep your books organized year-round, categorize expenses properly, and provide clean financial statements to your tax preparer. Most bookkeepers don't file returns, but their work directly impacts what you owe.
Read answer
