Restaurant and Cafe Accounting: The 2025 Definitive Guide
Master the fundamentals of hospitality accounting for small businesses — from bustling bakeries to cozy cafés, vibrant delis, and mobile caterers.
Running a food business is an exciting, creative, and chaotic venture — but it only succeeds with solid financial management behind the scenes. This definitive guide walks you through the essentials of accounting and bookkeeping for hospitality businesses in 2025.
Table of Contents
Recording Sales
Paying Suppliers
Hiring Staff
VAT (Value Added Tax)
Choosing Accounting Software
Bookkeeping & Chart of Accounts
Financial Reporting & Goal Setting
1. Recording Sales
Your sales system is the heartbeat of your hospitality business — especially in high-volume environments like cafés or restaurants.
Modern POS Systems
In 2025, cloud-based POS systems are the standard. They track every sale, integrate with accounting software, and produce real-time sales insights.
Top Picks:
Square POS – Great for small vendors and pop-ups. Easy integration with Xero and Shopify.
Goodtill by SumUp – Strong for cafés and bakeries. Offers an all-in-one ordering, POS, and payment solution.
Lightspeed – Popular with larger restaurants and multi-site operators. Strong reporting tools and scalable features.
Payment Processing
Every card transaction involves a payment processor. Choose based on fees, settlement speed, and integrations.
Recommended Options:
Stripe – Best all-rounder with advanced APIs and fast settlements.
Zettle by PayPal – Great for card payments and simple in-person sales.
Worldpay – Widely used; good for businesses preferring traditional setups.
Online Ordering
Many cafés and restaurants now offer click-and-collect or delivery from their own website.
Popular Platforms:
Slerp – Instagram-integrated ordering, ideal for visual-first brands.
Shopify with POS – Great for retail cafés selling merchandise, beans, or meal kits.
StoreKit Order & Pay – Contactless table service and click & collect solutions.
2. Paying Suppliers
In hospitality, managing supplier invoices is a daily challenge. Streamlining this process saves time and improves supplier relationships.
Simple System:
Organize digital invoices by email folders.
Set a weekly or bi-weekly payment day.
Use folders like “To Pay” and “Paid” to stay on top.
Advanced Workflow:
Use software like Dext (formerly Receipt Bank) to scan and record invoices.
Sync with accounting tools (like Capium).
Pay suppliers through your bank or use bill payment tools like Telleroo.
Tip: Store invoices electronically and back them up. HMRC requires you to keep records for at least six years.
3. Hiring Staff
Whether you're hiring your first barista or building a full kitchen team, there are important legal and financial obligations.
What You Must Do:
Register as an Employer with HMRC.
Pay at least minimum wage and issue a written employment contract.
Provide Employer’s Liability Insurance.
Set up a pension scheme for eligible staff.
Payroll Tools:
Xero Payroll – Great for those already using Xero.
Capium – Powerful and accountant-friendly.
QuickBooks Payroll – Easy to use for non-accountants.
Workplace Pensions:
NEST – Government-backed and free for employers.
The People’s Pension – Easy admin with solid employee benefits.
Aviva – Slightly more complex but often better investment options.
Don't Forget: You’re responsible for tax deductions (PAYE), National Insurance, and enrolling staff into a pension scheme.
4. Understanding VAT
VAT is one of the most misunderstood areas for restaurant and café owners. But getting it right can save you money — and headaches.
When to Register:
You must register if your revenue exceeds £90,000 in the past 12 months (as of the latest 2025 threshold). You can also register voluntarily if:
You sell mostly zero-rated items (like bread, coffee beans).
You incur large VAT expenses (like fit-outs or equipment).
Your clients are VAT-registered businesses (e.g., catering for offices).
VAT Returns:
Usually filed quarterly.
Must be submitted via Making Tax Digital software (e.g., Xero, QuickBooks).
Track both output VAT (charged on sales) and input VAT (paid on expenses).
Tip: Store all VAT receipts digitally. HMRC may inspect at any time.
5. Choosing Accounting Software
Choose an accounting system that grows with your business and supports digital VAT submissions, payroll, and integrations.
Top Recommendations:
Capium – Intuitive, scalable, and with wide integration options.
QuickBooks Online – Strong for freelancers or simple food businesses.
FreeAgent – Ideal for solo traders or caterers with low overheads.
Add-ons Worth Using:
Dext – Receipt and invoice scanning.
Soldo – Prepaid staff expense cards with accounting integration.
Chaser – Automates payment reminders and helps manage debtors.
6. Bookkeeping Essentials
Your books are the foundation of your financial reporting. Accurate bookkeeping = better business decisions.
Chart of Accounts Tips:
Keep revenue categories broad. Use your POS for detailed sales analysis.
Break expenses into clear categories: food, packaging, staff costs, rent, etc.
Track fixed vs. variable costs to spot creeping spend.
Balance Sheet Overview:
Assets: What you own — cash, equipment, receivables.
Liabilities: What you owe — taxes, suppliers, loans.
Equity: Retained earnings + shareholder investment.
Bank Reconciliation:
Do this weekly or monthly. Matching bank transactions with your books ensures accuracy and flags errors early.
7. Financial Reporting & Goal Setting
Many food business owners shy away from the numbers — but understanding them can be empowering.
Start with Your Goals:
Ask yourself:
Do you want to scale into multiple locations?
Do you want to earn a steady income and keep things small?
Are you aiming for premium quality and long-term brand equity?
Track What Matters:
You don’t need 10 dashboards. Start with 3 KPIs:
Profit margin
Cash flow
Staff cost as % of revenue
Then tailor your reports based on your priorities.
Example: If you're aiming for high quality, track customer reviews, repeat business, or Google rating trends instead of just revenue growth.
Final Thoughts
Restaurant and café accounting doesn’t have to be intimidating. With the right tools and systems, you can stay on top of your finances, make smart decisions, and grow a business you love.
Whether you're brewing flat whites or building a food empire — let your numbers support your passion, not drain it.