Ask an accountant: hospitality
The questions venue owners actually ask, answered the way they would be answered on a call: the short answer first, then why, then the free tool if there is one. Rates are those applying in 2026/27, and licensing items are England and Wales.
27 questions, answered plainly
Divide the plate cost by one minus the target, then add the VAT back: a £3.20 plate at 70 per cent is £10.67 ex VAT, £12.80 on the menu. The step everyone forgets is the VAT one, and skipping it means the menu quietly earns 64 per cent instead of 70.
UK full-service venues commonly hold food in the mid-60s to low 70s and drink around 70 to 75, measured ex VAT. The demo venue runs 68 and 72. But percentages steer and pounds pay: a 65 per cent dish earning £9 of cash beats an 80 per cent dish earning £4, every service.
Price it twice. The bought cost is the cash that left, £6,760 a year on the demo's £130 a week, and that is the real loss. The menu value, £25,350, is the ceiling if every binned plate would have sold: quote it to the kitchen, book the cost. Then split it, prep, spoilage, plate, comps, because each has a different fix.
£16.36 from 1 April 2026, against the £12.71 headline: holiday accrual at 12.07 per cent, employer National Insurance above the threshold and the minimum pension land on every hour. Price the rota at the loaded rate or under-cost the week by more than a quarter.
Most full-service venues live between 28 and 34 per cent of EX-VAT sales, with the full labour cost counted, on-costs included. The demo runs 32.1. Watch the two cheats: measuring against till takings flatters by a sixth, and leaving out employer NIC flatters again. A target hit by mismeasuring is not hit.
Hours, pay and the calculation, kept six years. The traps that fail inspections are deductions: uniforms, breakages and till shortages that pull a pay packet below the floor for the hours actually worked, including the shift that ran late. The onboarding file is where the defence is built.
Yes, at the £8.00 floor, with limits: restricted hours, no unsupervised alcohol sales, and some kitchen equipment out of bounds. The rota planner carries the under-18 and 18-to-20 floors so the mixed crew prices honestly.
Yes, since 1 October 2024: every tip the business receives or controls reaches workers by the end of the month after the month it was paid, with no admin fee and no house share, under a written policy with records the team can request. The enforcement route is the tribunal, and the records make breaches self-evidencing.
£22,485 a year on the demo's £1,880 a week: £14,664 of employer NIC the business does not pay and £7,821 the team keeps, about £652 each across twelve people. The condition is independence: the employer must not decide the shares. Income tax is due either way, through the tronc's own PAYE.
Someone the team trusts and the owner does not control: commonly a senior front-of-house figure. They hold the written basis, allocate consistently, sign the month and run the tronc PAYE. An owner who quietly sets the shares collapses the NIC exemption, back years included.
A genuinely discretionary one, which the customer can strike off, is: outside VAT, inside the Tips Act. A compulsory one is part of the price: standard rated, the business's revenue, and then subject to the Act's fairness rules if passed on. The wording on the menu decides, so write it deliberately.
When any rolling twelve months of turnover passes £90,000, re-totalled every month end, or immediately if the next 30 days alone will. You have 30 days to register and are registered from the first day of the second month after. Zero-rated cold takeaway counts toward the threshold; tips through the tronc do not.
Because hot is a legal test with five limbs, heated to order, kept hot, heat-retentive packaging, advertised hot, sold to be eaten hot, and the fresh-baked roll cooling naturally fails all five while the coffee passes at least one. Cold takeaway food is zero rated; everything eaten in is standard.
Yes. A retained deposit is treated as payment for the supply, so a kept £10 recovers £8.33. Build it into the policy arithmetic: the deposit's real work is deterring the no-show, which saves the full contribution, not keeping the tenner.
Usually not, once the input VAT given up is counted: food purchases carry reclaimable VAT that the scheme surrenders in exchange for its flat percentage. Under £150,000 of turnover you may join; whether you should is one afternoon of arithmetic against your own quarter, not a fashion choice.
Because takings read the season and the big bills do not. The demo venue clears its weekly nut by £4,034 in the loudest week and £509 in the quietest, while the rent quarter lands in week one and the VAT earned in the busy quarter falls due in the quiet one. Profitable and illiquid is hospitality's default winter setting, and the 13-week sheet is the instrument.
Size it from your index, not a rule of thumb: the lumps that fall due in the quiet stretch, less what the thin weeks clear above the nut. On the demo that is £30,800 of rent and VAT against £6,071 of thin-week margin, so the peak banks £24,729, monthly, into a separate account, on purpose.
The weekly nut, fixed costs plus the committed rota, divided by contribution per cover. The demo: £11,150 over £21.87 of contribution is 510 covers a week, 42.5 a service, against 620 actually served. Everything after cover 510 is the week's profit, which is what a no-show actually wastes.
Takings against last week and last year, food and drink GP from the counts, labour percentage on ex-VAT sales, the cash position with the week's commitments, and wastage in pounds. Every one comes from a free tool here, and the close ends with one written decision or it was a scrapbook.
Food business registration 28 days before opening, free and unrefusable. A premises licence with a named DPS for alcohol and late-night hot food. TheMusicLicence for any music. A pavement licence for outside tables. Then the non-licences that bite: employers' liability at £5 million from the first hire, and the fire risk assessment before opening night.
The contribution, not the menu price: £21.87 per empty chair on the demo book, £13,645 a year at a dozen a week. A deposit policy recovers £8.33 of a kept £10 after VAT, but its real work is deterrence, because a prevented no-show is worth the whole £21.87.
Daily, not monthly: expected cash is the till reading less card less petty cash, counted against the drawer the same night, variance investigated while the shift is still findable, row initialled. The habit is the control; a week-old variance has no suspects.
If the GP number is going to mean anything, yes: cost of sales is opening plus purchases less closing, and two of those three are counts. Same time every week, wet and dry, valued at cost. It is an hour that turns the venue's most important percentage from a guess into a measurement.
The year of weekly closes in one folder, the year-end stock count wet and dry, the tronc reconciliation showing received equals allocated for all twelve months, the voucher and deposit lists, and the equipment register. Bring those and the accounts are an assembly job; the reliefs, the annual investment allowance and the £150 a head function exemption, get claimed instead of remembered in February.
Employers' liability at £5 million minimum from the first employee, trial shifts included, certificate displayed. Public liability is not a legal requirement and is commercially essential; the licence conditions and the lease usually add their own list.
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