Restaurant accounting software: simplify your finances with Xero

Published Friday 23 January 2026

Table of contents

• Why restaurants need specialised accounting software
• Choose software with restaurant-specific features
• Track inventory to reduce waste and boost profits
• Integrate your POS system with accounting software
• Price your menu based on real costs
• Capture every expense to reduce your tax bill
• Get real-time insights to make better decisions
• Stay compliant with restaurant tax requirements
• Make your restaurant’s finances easier to manage
• FAQs on restaurant accounting software

Key takeaways

• Choose restaurant accounting software with industry-specific features like POS integration, tip distribution tracking, and perishable inventory management to handle the unique challenges of hospitality businesses.
• Integrate your point-of-sale system with accounting software to automatically record all transactions and enable accurate daily reconciliation without manual data entry.
• Use real-time cost tracking and sales data to price your menu accurately, ensuring you account for ingredient costs, overheads, and market conditions to maintain profitable margins.
• Capture every business expense immediately through your accounting software to maximise tax deductions and maintain accurate profit visibility, especially for last-minute purchases and multiple supplier transactions.

Why restaurants need specialised accounting software

Strong financial management helps more restaurants succeed beyond their first year. Restaurants face unique accounting challenges that generic software can't handle.

• Daily transaction volume: Hundreds of small payments create reconciliation complexity.
• Low profit margins: Average restaurant profit margins of 3–5% mean you need precise cost tracking, especially as rising costs have led 58% of food and beverage businesses to raise prices for customers.
• Perishable inventory: Careful monitoring of food waste helps protect your profitability.

You need a system built for the unique challenges of hospitality. Look for software that helps you manage cash flow, track inventory, handle complex staff schedules, and integrate with your point-of-sale (POS) system. Choosing the right software from the start gives you the accurate, real-time data needed to make confident business decisions.

Essential restaurant accounting software features include:

• Cloud-based access: Manage finances from any device, anywhere
• Real-time accuracy: Make confident decisions with current data
• User-friendly interface: Start immediately without extensive training
• Live business insights: Monitor performance as it happens
• Restaurant-specific flexibility: Handle tips, inventory, and irregular hours

Choose software with restaurant-specific features

Flexible restaurant accounting systems adapt to unconventional business hours and complex staffing needs. Unlike many other businesses, your restaurant operates during evenings, weekends, and holidays when you may not be watching your financial systems as closely.

Critical payroll features your software must handle:

• Shift changes: Cut manual rescheduling when staff cancel or you need cover at short notice, by sending open shifts to team members automatically
• Tip distribution tracking: Manage both digital and cash gratuities across your team while maintaining legal compliance through automated allocation systems
• Frequent staff changes: Make it easy to add new staff and remove leavers from payroll when your team changes often

Track inventory to reduce waste and boost profits

Restaurant inventory management differs from retail because all stock is consumed on-site, creating unique tracking challenges for perishable goods with limited shelf life.

Perishable inventory costs include:

• Storage expenses: Refrigeration and space costs for excess stock
• Waste losses: Spoiled ingredients that can't be recovered
• Opportunity costs: Capital tied up in unused inventory

Sales trends: Your software can use past sales to predict busy periods. This helps you order the right amount of stock, cut waste, and avoid running out of key items at peak times.

Integrate your POS system with accounting software

POS integration connects your payment systems directly with accounting software, automatically recording both cash and card transactions for accurate daily reconciliation.

A good point-of-sale (POS) system will handle these payments for you and connect to your accounting software. That will help you update your cash flow predictions daily and make life easier for your employees.

Daily sales processing options for high-volume transactions:

• Batch invoicing: Create single daily sales invoice with cash control account
• Direct recording: Use bulk money receipt function for total daily takings
• Split processing: Separate daily invoice into cash and card payment accounts

Other options are available. Talk to your bookkeeper or accountant to find out which one best suits your business.

Price your menu based on real costs

To price your menu well, you need to balance ingredient costs, overheads, and local competition. This has become harder as energy prices have risen, affecting 60% of food and beverage businesses in early 2022.

Planned vs unplanned discounting: You can use loss leaders to attract customers when you plan them. But if you set prices without checking your costs, you can quickly reduce your profits.

The restaurant accounting software you choose can help make this task easier. You can create reports to estimate meal prices on a weekly or even daily basis. Armed with the numbers, you can check out the competition and make informed pricing decisions.

Capture every expense to reduce your tax bill

Last-minute purchases: When you have to buy extra stock at short notice, your software should record those costs so you still see your true profit.

Multiple supplier management tracks purchases from various sources, a key strategy for the 37% of food and beverage businesses that are increasing diversity in suppliers to navigate market challenges.

Complete expense capture requirements:

• Document all purchases: Record every transaction regardless of size
• Process receipts immediately: Prevent lost documentation and missed deductions
• Maximise tax offsets:Claim all legitimate business expenses to reduce tax liability

Get real-time insights to make better decisions

Running a restaurant means making quick decisions. The right accounting software gives you a live view of your business performance. Use customisable dashboards to track key metrics like daily sales, food costs, and labour expenses.

With real-time cash flow reports, you can see exactly where your money is going. This clarity helps you spot trends, manage spending, and plan for growth with confidence, all from your laptop or mobile device.

Stay compliant with restaurant tax requirements

Tax compliance in the restaurant industry can be complex. You need to manage VAT on sales, handle payroll taxes for your staff, and keep accurate records of all your expenses.

Good accounting software simplifies this by automating calculations and preparing the reports you need for tax time. It helps you claim all eligible expenses and stay up to date with regulations, so you can feel confident your numbers are right.

Make your restaurant’s finances easier to manage

Restaurant accounting software gives you a clear view of your numbers so you can make confident decisions about profit and growth. The right system helps you cut waste, set profitable prices, and save time on daily admin.

From revenue to payroll, and from inventory to expenses, having a great small business accounting system matters. Before you even open your new restaurant, it's sensible to have a plan for your accounting system in place. Used wisely, it will help you manage and grow your restaurant business.

Ready to simplify your restaurant's financial management? Try Xero for free and see how cloud-based accounting can save you time and give you clearer numbers.

FAQs on restaurant accounting software

Here are answers to some of the most common questions about accounting software for restaurants.

What is the best accounting software for a restaurant?

The best accounting software for a restaurant is one that offers industry-specific features. Look for tools that help with inventory management, POS integration, payroll for hourly staff, and detailed cost reporting. Cloud-based software like Xero is often preferred for its flexibility and real-time data access.

What software do most restaurants use?

Many restaurants use a combination of software, including a point-of-sale (POS) system for transactions and specialised accounting software for financial management. Platforms like Xero are popular because they integrate with hundreds of restaurant-specific apps for POS, inventory, and staff scheduling, creating a single, connected system.

What type of accounting is used in restaurants?

Restaurants can use either cash or accrual accounting. Cash accounting records transactions when money changes hands, which can be simpler for smaller businesses. Accrual accounting records income and expenses when they are earned or incurred, providing a more accurate picture of profitability over time. Your accountant can help you decide which method is right for your business.