Running a restaurant or cafe in Hawaii is a dream for many. You get to serve delicious food and share the aloha spirit with locals and tourists alike. But to run a successful business, you need to know your numbers. Thinking about your finances can feel complicated, but it doesn’t have to be.
Understanding a few key numbers—also known as Key Performance Indicators (KPIs)—can show you if your business is healthy and where you can make changes to grow.
This guide keeps it simple. We’ll walk you through the five most important financial numbers you should track. At Vertaccount, we help restaurant owners across Hawaii make sense of their finances, so they can focus on what they do best: making great food.
Why Good Bookkeeping is a Must-Have in Hawaii
Before we get to the 5 key numbers, let’s talk about bookkeeping. Think of bookkeeping as keeping a clean, daily record of all the money that comes in and goes out of your business.
For a restaurant in Hawaii, this is extra important. Good bookkeeping helps you:
- Track supplier costs: Know exactly what you’re spending on local produce or ingredients shipped to the islands.
- Manage payroll easily: Pay your hardworking staff correctly and on time.
- See your real profit: Understand how much money you’re actually making.
- Stay organized: Having clean records makes everything easier, especially when you need to get a loan or check on your business’s health.
Good bookkeeping is the first step to understanding your restaurant’s finances. Services like our Simple Month-End Bookkeeping can handle this for you, so your records are always accurate and up-to-date.
The 5 Key Numbers (KPIs) to Watch
Once your bookkeeping is in order, you can track these numbers to see the big picture.
1. Cost of Goods Sold (COGS)
What it is: This is the total cost of all the ingredients and drinks you used to make the food you sold. It includes the Koloa rum for your Mai Tais and the Puna-grown greens in your salads.
Why it’s important: COGS tells you if you are spending too much on ingredients. If this number is high, your menu prices might be too low, or you might be wasting food. Keeping an eye on COGS is key to making a profit on every dish you sell.
How to figure it out: COGS=(ValueofInventoryattheStart+NewInventoryYouBought)−ValueofInventoryattheEnd
2. Prime Cost
What it is: Prime Cost is your COGS plus what you spend on labor (employee wages, taxes, benefits). These are your two biggest expenses.
Why it’s important: This number shows how much you’re spending on food and people to keep your restaurant running. According to industry leaders like the National Restaurant Association, you want to keep this number below 60% of your sales. If it’s higher, your profit will be very low.
How to figure it out: PrimeCost=CostofGoodsSold(COGS)+TotalLaborCost
Tracking this helps you manage staff schedules and food costs better. Our Payroll Processing and Accounts Payable Management services can give you the clear numbers you need to calculate this.
3. Break-Even Point
What it is: This is the amount of sales you need to make just to cover all your costs. When you hit your break-even point, you officially start making a profit.
Why it’s important: It tells you the minimum sales you need to hit each day, week, or month to avoid losing money. Knowing this helps you set clear sales goals for your team.
How to figure it out: $Break-Even\ Point\ (in\ Sales\ )=fracYourTotalFixedCosts(TotalSales−TotalVariableCosts)divTotalSales
Fixed costs are things like rent, and variable costs are things like food. You need very clean books to figure this out. If your records are a mess, our Clean-Up/Catch Up Accounting service can fix them for you.
4. Gross Profit Margin
What it is: This is the money you have left from sales after you subtract the cost of ingredients (COGS). It’s usually shown as a percentage.
Why it’s important: This number shows how profitable your menu is. A high gross profit margin means you’re doing a great job with your menu prices and controlling food costs. This leaves more money to pay for staff, rent, and other bills.
How to figure it out: GrossProfitMargin=frac(TotalSales−COGS)TotalSalestimes100
5. Labor Cost Percentage
What it is: This number shows how much you’re spending on labor compared to your total sales.
Why it’s important: Labor is a huge expense. As food industry experts at Toast point out, a healthy restaurant tries to keep this number between 20-35% of sales. If it’s too high, it will eat up your profits. Tracking it helps you make smarter staffing schedules so you don’t have too many people working during slow hours.
How to figure it out: LaborCostPercentage=fracYourTotalLaborCostYourTotalSalestimes100
Simple Restaurant Accounting for Your Hawaii Business
Tracking these financial KPIs might feel like a lot, but it’s the best way to build a stronger, more profitable restaurant. And you don’t have to do it by yourself.
Think of Vertaccount as your partner for restaurant accounting in Hawaii. We take care of the numbers so you can focus on your passion for food and service. Whether you need help with Full Bookkeeping, managing bills, or even a full SCALE Managed Outsource Team, we have a solution that fits.
We have offices right here in Hawaii, as well as in South Carolina, New York, and other locations, to provide expert financial help.
Ready to get your finances under control? Contact Vertaccount today to talk with our team.
