Updated Checked by the Tax-Services.ca editorial team How we check
Restaurant bookkeeping comes down to four numbers you check every week: sales, food and drink cost, labour and the sales tax you’ve collected. A $1,000 dinner bill in Ontario carries $130 of HST, so $1,130 on the till, and that $130 was never your money. Books that keep it apart from revenue are what stop a tax bill from arriving as a surprise.
What should a restaurant record every day?
Start with takings by payment type, then the tax on them. The GST/HST calculator shows the split. In Ontario a $1,000 sale before tax adds $130 HST. In Alberta it adds $50 GST. In Quebec the GST is $50 and the QST is $99.75, so the customer pays $1,149.75.
If you sell in BC, take care. Our GST/PST calculator applies one combined rate there, and we haven’t confirmed how each menu item is treated. Check the province’s own rules for restaurant food before you rely on it.
Tips are another grey area. We didn’t check how tips must be recorded or shared, so look at the CRA pages for your case.
Which numbers tell you if the place is making money?
| Number | How to work it out |
|---|---|
| Food and drink cost | Opening stock plus purchases minus closing stock |
| Food cost percentage | Food and drink cost divided by food and drink sales |
| Labour percentage | Wages and employer costs divided by sales |
| Gross margin on a dish | Menu price minus ingredient cost, divided by menu price |
We don’t publish a “good” percentage, because targets vary by kind of restaurant and we couldn’t confirm a reliable benchmark. Track your own trend instead. If food cost climbs three weeks running, something’s off: portions, waste, a supplier price or theft.
To test one dish, use the profit margin calculator. Enter what the plate costs you and what you charge, and it gives the margin.
What does one week look like in numbers?
Here’s a made-up week for a small diner, just to show the arithmetic. Opening stock is $4,000, purchases are $9,000 and closing stock is $3,500, so food and drink cost is $9,500. On $30,000 of sales that’s a food cost of 31.7%. Wages and employer costs of $9,000 give a labour percentage of 30%. Add the two and you’re at $18,500, or 61.7% of sales, which leaves the rest for rent, utilities, insurance and you.
The figures are invented, so don’t compare yourself to them. What matters is that you can do this sum in ten minutes every Monday, and that it’s the same sum every week.
How do you handle payroll in a restaurant?
Restaurants have many staff on short shifts, so payroll errors add up fast. Every pay run creates money owed to the CRA, and the due date depends on your remitter type. The payroll remittance calculator gives you a rough figure to reserve. For a single cook’s cheque, the payroll deductions calculator lists each deduction.
Put the remittance in a separate bank account. It makes the cash look smaller than it is, and that’s the point.
Can you write off meals in your own restaurant?
Usually the answer is about who eats. The CRA limits food, beverage and entertainment claims to 50% of the amount paid or a reasonable amount, whichever is less. But the 50% limit doesn’t apply when your business regularly provides food and drink to customers for pay, such as a restaurant, and you bill the customer and show the cost on the bill. So the food you cook and sell isn’t cut in half. A dinner where the owners entertain a supplier is a different story.
What counts as “reasonable” is a judgement, so keep the receipt and write the reason on it.
Mistakes that hurt small restaurants
- Mixing tax collected into sales, then spending it.
- Counting stock only at year end, so you never see waste until it’s too late.
- Losing supplier invoices. The CRA says required records stay six years from the end of the last tax year they relate to.
- Paying yourself from the till with no note of it.
Whoever keeps your books, look at the monthly statements yourself. It takes twenty minutes and it’s your money. Even a few bucks of drift each week, a missed invoice here or a double-entered delivery there, turns into a real gap by December.
Where do these figures come from?
Meal deduction and record rules come from the Canada Revenue Agency pages we read in September 2026. Sales tax examples come from the 2026 rates in our calculators, and the weekly example is our own arithmetic. We name no product or firm, and the site has no link with the CRA or any government body.
Frequently asked questions
What should restaurant bookkeeping track first?
Daily sales, the sales tax collected, food and drink cost, and payroll. Keep collected tax separate from revenue.
Does the 50% meals limit apply to a restaurant's own food?
The CRA says the 50% limit doesn't apply when you regularly provide food to paying customers and show the cost on their bill.
How long do I keep restaurant records?
Six years from the end of the last tax year they relate to, in most cases.
What is a good food cost percentage?
We couldn't confirm a reliable benchmark. Track your own figure over time and look for changes.
How are tips handled in the books?
We didn't confirm the rules for tips. Check the CRA pages for your situation before you set up the accounts.
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