Accounting for Spoilage

Accounting for Spoilage

Restaurant books account for overhead, such as the costs of paying employees, utility bills and purchasing food items. Gross profits are the amount of money a restaurant takes in, and net profits are the difference between the gross profits and all operating costs. Restaurants should track the value of all spoiled food every week or month, so the Internal Revenue Service doesn't suspect the business of underreporting profits at tax time. According to an IRS audit guide for restaurants, food spoilage rates above 8 percent may appear suspicious to auditors.

Preventing Spoilage and Waste

Given that too high a rate of spoilage can trigger a tax audit and interferes with profits, restaurants should do all they can to minimize loss due to spoilage. Foods closest to their date of expiration should be used first, make sure perishable items are properly refrigerated and reduce the amount of perishable items kept in stock. Restaurants can even get spoilage insurance to prevent a significant loss of profits.