Ariel Varney

6 Keys to Choosing the Right Restaurant Accounting Software

Trying to find the best accounting software for your restaurant can feel like trying to guess what's behind a series of locked doors.

So you’re in the market for new restaurant accounting software. It’s a tough decision, and not one to take lightly. After all, your accounting package is a program that your team will work with every day for years to come. 

If you’re thinking about accounting software, it’s likely that one of three things is happening: First, you might be starting a restaurant, in which case, congrats! Second, you might be dissatisfied with your current software. If so, you have my sincerest condolences—it's a frustrating place to be. The third possibility is that your restaurant business has grown or changed and your software isn’t keeping up.

How do you know if you're ready for a change? In my experience, there are three major signs you’re outgrowing your current accounting software:

  • Your current software lacks critical features or doesn’t capture the data you need. 

  • You (or your team) are spending too much time on manual work that more advanced accounting software could handle for you.

  • You’re paying on a per-seat basis but your team (or number of users) has grown and additional licenses are prohibitively expensive.

Regardless of why you’re looking, I’m here to help. After a decade with CTUIT, I’ve moved into restaurant technology consulting, where I guide clients to make good decisions about which software to use and how to set themselves up for success. I've seen a lot of businesses make this kind of transition and I'm invested in helping them find the solution that's right for their needs.

While it’s tempting to get caught up in finding the "best" restaurant accounting software, the reality is that there is no one-size-fits-all answer. A better approach is to think about these six factors as they relate to your business:

  1. Cost

  2. Pricing model

  3. Complexity

  4. Customizability

  5. Features

  6. Business size

I’ll walk you through each of these so you can make an educated decision about your software. I’ll also give you some parting advice about vetting restaurant software. Oh, and if you make it all the way to the end, you’ll find a nifty little bonus to help you get started on your search.

 

When choosing any software, cost is always an issue. But don't just think about the base cost; take the pricing model into account as well.

1. Cost

For smaller or newer businesses, accounting software can feel like just another system they have to pay for. To some degree, that’s true, especially for restaurateurs who aren’t as interested in the business side of the business.

In those cases, “good enough” may be good enough. They should focus on finding accounting software that works for them and not get too bogged down by all the bells and whistles high-end platforms offer.

Here’s the thing: If your restaurant is—in the grand scheme of things—more of a Honda Civic than a Ferrari Testarossa, there’s no point in getting a Ferrari-grade accounting platform. If you’re working with just a handful of invoices a week and cutting just a few checks, it’s okay to get software that handles that level of work. However, if you’re doing check runs where you’re cutting 750 different checks and need to attribute them to different accounts, you need more power.

That said, don’t assume that higher cost necessarily means higher quality. While more robust feature sets tend to be associated with a bigger price tag, that doesn’t mean much if you don’t actually use those complicated modules. (More on that in the Features section, below!)

 

2. Pricing Model

The overall price is easy to understand, but pricing models can be incredibly convoluted. However, they’re important to keep in mind because they determine what you get for your money and can cause real problems as your business grows.

The traditional software pricing model was a one-time fee where you get one version of the software (think early Microsoft Office, where an updated version was released every few years, costing several hundred dollars a pop). The downside of this model is that if you pay once and never upgrade, you can run into a situation where you’re trapped into using outdated software or where a change would be both expensive and incredibly time-consuming.

While I don’t recommend it, if you purchase software using this pricing model, pay close attention to reviews of the specific version that you’ll be using. You need to be confident that it works well now and that it’s going to be supported well into the future. If you have any hesitation, it’s not the right choice.

More common these days is software-as-a-subscription (SaaS). Under a SaaS pricing model, you'll pay a monthly fee in return for always having access to the most recent version. That means you not only get crucial bug fixes, but also the newest features as they’re released. 

While people used to be incredibly wary of updates, that’s the speed of software these days. Even better, those new releases bring tons of opportunities for improvement because software companies know that they have to keep users happy or a competitor’s likely to woo them away.

 

Restaurant accounting software needs to be able to handle the complexity of your business as it currently stands, but should also be able to grow with you as your needs change.

3. Complexity

When it comes to complexity, there’s always a trade-off between ease of setup and use and the complexity of your data needs. The majority of systems that fall in the “easy to use” category tend to be cheaper, but may not be able to handle more complicated needs.

For example, if you’re working with multiple LLCs or cost centers, you could soon find yourself frustrated with software that wasn’t built to support that. On the other hand, if you opt for high-powered accounting software (which is likely to be high-cost) but your business is fairly straightforward and you don’t take advantage of those advanced features, you won’t get your money’s worth.

And, of course, you’ll want to think about implementation and support. Find out whether you’ll be able to handle setup yourself or if you’ll need to involve someone from IT—or an external consultant like myself. But don’t be swayed by promises that you’ll be up and running in minutes. If you don’t have access to ongoing support (or if it costs an arm and a leg), you may find yourself in a real pickle a few months down the road.

 

4. Customizability

When thinking about customizability, think about your restaurant’s KPIs—the key performance indicators that you use to gauge the health of your business. KPIs aren’t the same for all restaurants. While table turn is a common KPI for full service restaurants, it means nothing to a quick service establishment which would use a productivity metric like SPLH (sales per labor hour).

Look for software that captures the data you need to measure the KPIs that matter to you. If it doesn’t, consider choosing software with an open API, which is basically a data dictionary for development customization. Bringing on a software developer, even for a one-time job, can enable you to pull data out of your accounting package to automate your reporting or to create data visualizations (charts and graphs) that illuminate what’s going on in your business.

Just as important, though, is the potential for your KPIs to evolve. Whether you’ve got a new business and haven’t yet figured out your North Star metric or your business is growing and that crucial KPI has changed, your accounting software needs to be able to keep up. While you don’t want to overbuy in hopes that you’ll eventually need enterprise-level software, you also don’t want to have to switch packages after just a couple of years.

 

Creating a checklist of must-have and nice-to-have features can help when trying to decide between software platforms.

5. Features

Let’s get this straight: I’m not going to tell you which features you need. And that’s purposeful. When considering features, you need to take an approach that’s holistic but realistic—and that’s deeply embedded in your business needs.

That’s why I recommend putting together an internal committee. You should talk to different departments and users about what they need (not just what they think they might want). I’d suggest bringing together the heads (or seconds-in-command) of:

  • Finance/accounting, because they’ll use the software most.

  • Operations, which is likely to become a secondary user, especially if you choose well. If you're in a large organization, bring in ops people from both the store- and home office-level, as they often have different perspectives and concerns.

  • IT, so they can vet whether the software is updated regularly, whether it integrates with your existing technology stack, and whether the security is up to snuff.

  • Purchasing, if they’re going to use the software for inventory. However, if they’re only using it as a BI (business intelligence) tool, they may not need a seat at the table.

Having an array of users to provide input will help you to create a full picture of all the features you need as well as starting to create buy-in for the process (you’ll thank me for that during roll-out). Plus, this interdepartmental group can be helpful in identifying which features are must-haves and which are nice-to-have by asking why they’re needed…and just how badly.

 

6. Business Size

In my experience, once a group gets above five or six locations, they tend to realize that they need home office support. Prior to that point, each location can operate somewhat independently and it’s usually fine. But to keep a number of restaurants organized and cohesive, you really need people to manage the business end of things. The bonus, though, is that once you have that support, you can do more and add more—and more useful!—complexity to your systems.

That said, the size of your restaurant group or the number of locations using the software shouldn't necessarily dictate which software to use. Think about it this way: If your restaurant group is made up of nine locations that are all the same (or very similar), the accounting setup is likely to be the same at all of them and attributing expenses is likely to be pretty standard.

However, if you have a restaurant group with nine very different concepts—or, even more complicated, nine different LLCs—that’s often the equivalent of running nine different companies under one very large umbrella. In that case, each location may have different business needs, which means your accounting software has to be flexible enough and complex enough to manage them all.

 

Parting Advice

First off, be wary of vaporware! When vetting restaurant accounting software, you’ll have lots of questions about whether it has X feature or can handle Y function. If the salesperson answers “Yes” to all of them—and especially if the salesperson can’t show you a demo of how that exact feature works—you’re dealing with vaporware, software features that vanish into smoke when it comes time to use them.

Second, if the sales rep tells you that a feature is “coming soon” or they’re “working on it now,” that’s cause for a raised eyebrow, if not concern. While some companies are careful not to sell against features that aren't live and won’t be for a while, others are happy to lock you into a contract based on releases that are still in the planning stage. At the very least, investigate whether the company’s past promises about delivery dates have held true (talking to current customers is a great way to find out).

Finally, know when it’s a win. No software is perfect. And if you’re buying an off-the-shelf solution (as opposed to programming your own), that’s doubly true. That said, if you find software that does 80-85% of what you need, that’s a winner.

Now that you know which factors are important when choosing restaurant accounting software (and which ones aren't), you're ready to start looking. Go forth with confidence—and let us know how it goes!

Want a head start? Download our Restaurant Accounting Software Evaluation Worksheet. It's free, it's customizable, and it's designed to help you find the accounting solution that best fits your business.

Download a free Restaurant Accounting Evaluation Worksheet now!

 

Ariel Varney

Ariel Varney

At Tourage Consulting, we are restaurant and hospitality industry experts that work in all aspects of engagement and roll out of business intelligence (BI), operational accounting software solutions. Let our experience help you grow an even more profitable and successful business, leveraging all the data and technology that is currently on the market!