Chart of Accounts - Restaurant / Cafe

Restaurants and cafes have high transaction volume, tight margins, and labour-intensive operations.

What makes the bookkeeping distinct is the need to track food cost and beverage cost as separate COGS lines (they have very different margin profiles), manage daily cash and POS reconciliation, handle tips correctly, and monitor labour cost as a percentage of revenue — the two most controllable costs in hospitality are food and labour.

Recommended Chart of Accounts

Assets

Account	Type	Notes
Chequing Account	Bank	Operating account
Petty Cash	Bank	On-site cash float for small purchases and change
Accounts Receivable	AR	Add if you do catering or event invoicing
Inventory — Food	Other Current Asset	Add if you track food inventory formally. Small cafes often expense food as purchased (simpler); higher-volume operations should track inventory for food cost accuracy.
Inventory — Beverage	Other Current Asset	Separate from food if your beverage program is significant (wine, spirits, specialty coffee).
Prepaid Expenses	Other Current Asset
Equipment	Fixed Asset	Kitchen equipment, espresso machines, refrigeration, POS hardware
Leasehold Improvements	Fixed Asset	Any renovations to the leased space
Less: Accumulated Depreciation	Fixed Asset

Liabilities

Account	Type	Notes
Accounts Payable	AP	Food and beverage suppliers, linen service
Tips Payable	Other Current Liability	Credit card tips collected via POS that have not yet been paid out to staff. A liability until distributed — this is money you are holding on behalf of your team, not your income.
Gift Card Liability	Other Current Liability	Add if you sell gift cards. Unspent gift card balances are a liability until redeemed.
GST/HST Payable	Other Current Liability
PST Payable	Other Current Liability	In provinces where prepared food and/or alcohol is PST-taxable
Payroll Liabilities	Other Current Liability	CPP, EI, income tax withheld
Credit Card	Credit Card

Equity

Account	Type	Notes
Retained Earnings	Retained Earnings
Share Capital	Equity

Revenue

Account	Type	Notes
Food Sales	Income	Revenue from food items
Beverage Sales — Non-Alcoholic	Income	Coffee, juice, soft drinks. Splitting from food helps you see your beverage margin, which is typically higher.
Beverage Sales — Alcoholic	Income	Add if licensed. Alcohol has its own COGS, different markup targets, and in some provinces, different sales tax treatment.
Catering Revenue	Income	Add if you do off-site or event catering. Margins and cost structures differ significantly from in-house service.
Merchandise Sales	Income	Branded items, retail coffee bags, etc. Add when applicable.

Cost of Goods Sold

Account	Type	Notes
Food Cost	COGS	The cost of food ingredients and supplies used to produce sold menu items
Beverage Cost — Non-Alcoholic	COGS	Coffee beans, syrups, juices, soft drinks
Beverage Cost — Alcoholic	COGS	Wine, spirits, beer — track separately from non-alcoholic for inventory and margin purposes
Packaging and Disposables	COGS	Cups, lids, takeout containers, bags. Particularly significant for high-volume cafe or takeout operations.

Expenses

Account	Type	Notes
Salaries and Wages — Kitchen	Expense	Cooks, kitchen staff
Salaries and Wages — Front of House	Expense	Servers, baristas, hosts
Salaries and Wages — Management	Expense
Kitchen Supplies and Smallwares	Expense	Pots, pans, utensils, cutting boards — items that wear out but are not assets (under your capitalization threshold)
Linen and Uniforms	Expense	Table linen, staff uniforms, laundry service
Cleaning Supplies	Expense
Repairs and Maintenance — Equipment	Expense	Service calls and repairs for kitchen equipment
POS and Technology	Expense	Point-of-sale software subscriptions, payment processing fees
Music and Entertainment	Expense	Licensing (SOCAN/Re:Sound in Canada), streaming services
Rent	Expense
Utilities	Expense	Hydro, gas — significant for kitchens
Insurance	Expense	General liability, liquor liability if licensed
Marketing and Promotions	Expense
Professional Fees	Expense

Notes on Specific Accounts

Tips Payable

Credit card tips collected through your POS are temporarily your money — you are holding them on behalf of staff and distributing them on payroll or in cash. Until distributed, they are a liability. Do not record them as revenue. Cash tips given directly to staff do not flow through your books at all.

Splitting Food vs. Beverage Cost

The most important operational metric in hospitality is your food cost percentage (food cost divided by food revenue) and your beverage cost percentage. Keeping them separate lets you spot when one is drifting. A healthy food cost percentage for most restaurants is 28-35%; beverages (especially coffee) often run lower.

Labour Cost Tracking

Labour is typically your largest expense after food. Many operators track labour cost percentage (total labour divided by total revenue) as a key performance indicator alongside food cost. Your QBO P&L shows the numbers; the percentage is calculated separately or in a reporting tool.

Gift Card Liability

Gift card sales are not revenue when sold — you owe the holder a meal. Record the sale as a liability. When the gift card is redeemed, move the amount from Gift Card Liability to the appropriate revenue line. Breakage (unredeemed gift cards) can be recognized as revenue over time based on historical redemption patterns — your Mesa CPA advisor will advise on the correct approach.

Petty Cash

Most restaurants and cafes run a small cash float for daily change and minor purchases. Set up a Petty Cash account in QBO and reconcile it weekly. Untracked petty cash is one of the most common sources of unexplained losses.

When to track inventory formally

Small cafes often expense all food and beverage purchases as they are made (simpler). Higher-volume operations should track inventory to measure food cost accurately — otherwise you cannot know whether a high food cost week was due to waste, theft, or simply higher sales volume. Inventory tracking becomes important once you are doing enough volume that the margin matters.

FAQ

How do I handle daily cash sales in QBO?

Record a daily sales summary from your POS rather than individual transactions. Your POS system should produce a daily report showing total sales by category, tips, and payment method. Your bookkeeper enters this as a single journal entry or sales receipt. The bank deposit reconciles to the card transactions; cash is counted and deposited against the cash sales total.

The POS splits sales into food and beverages automatically. Does QBO pick that up?

It depends on your POS integration. Systems like Square, Toast, and Lightspeed have varying levels of QBO integration. Some push category-level detail automatically; others push a single daily total. Your Mesa CPA bookkeeper will set up the reconciliation workflow based on your specific POS.

Do I need to track food inventory in QBO, or can I just use my POS?

Many restaurants manage inventory in their POS system (which tracks by menu item) and only bring the summarized food cost into QBO. This is fine — as long as you can get a reliable cost of goods number from your POS to enter in QBO, you do not need to duplicate the tracking.

How do I handle employee meals?

Staff meals (food consumed by employees while working) are a business expense — a staff meal policy with a defined value per shift is cleanest. Record them either as a reduction in food cost or as a separate Staff Meals expense line. Consistency matters more than which approach you choose.