Restaurant and Cafe Accounting in Iran: From Recipe Card to Tax File

This is written for restaurant, cafe and fast-food owners and for the accountants who handle their files. The aim is to show how one system can give you the real cost of a plate and, at the same time, stand up to a tax audit. In the hospitality files I have handled, the problem almost always starts in the same place: no link between the kitchen, the store and the till.

Why hospitality is different

A shop resells what it buys. A restaurant is a manufacturer that converts raw material into product within hours, sells the product the same day, and leaves no finished-goods stock to count. All control therefore has to sit on material in and sales out, because the middle of the chain cannot be counted.

Add short shelf life, a heavy payroll share and daily sales volatility, and a restaurant that only produces a monthly trial balance is effectively being run blind.

Chart of accounts and cost centres

The minimum split any restaurant needs:

• Revenue by channel: dine-in, takeaway, delivery platform, corporate orders
• Cost of sales by group: protein, dairy, produce, dry goods, beverages, packaging
• Payroll split between kitchen, floor and administration
• Occupancy: rent, energy, service charges
• Selling costs: platform commission, marketing, promotional discounts

If a cafe and a restaurant sit inside one venue, define each as its own cost centre. Without that split you will never know which side is subsidising the other.

Food cost: the recipe card underpins everything

Write a recipe card for every menu item: exact quantity of each ingredient in grams or millilitres, a preparation yield factor, and the current rate for each input. The result is the theoretical cost per plate, used for menu pricing, monthly variance, and for deciding which items to fix or drop.

Input prices in Iran move quickly, so refresh recipe cards at least quarterly, and monthly during a price surge.

Theoretical cost comes from item sales quantity times recipe cost. Actual cost comes from opening stock plus purchases minus closing stock. The gap between them is the variance, and it must be explained every month.

Waste: three types, three treatments

• Preparation loss — trimming and portioning. This belongs in the recipe card as a yield factor, not in the stock shortage line.
• Cooking and service waste — burnt dishes, wrong orders, customer returns. Log these daily on a waste sheet with a reason.
• Storage waste — spoilage, expiry, breakage. Raise a disposal record signed by the storekeeper and the manager.

Each has a different management fix. On audit, documented and reasonable wastage is normally accepted, while an undocumented shortage is read as sales made without an invoice. General deductibility conditions are in the allowable expenses article.

Stocktaking procedure

1. Split items into A, B and C classes; class A is high value and fast moving.
2. Count class A weekly, class B monthly, class C quarterly.
3. Count before service starts or after close, never mid-shift.
4. Have two people sign the count sheet: the storekeeper and someone independent.
5. Value each shortage at current rates in the monthly report.
6. Apply closing stock to the same period's cost of sales, not the next one.
7. Investigate any shortage above a defined threshold and list near-expiry items.

The full counting and record procedure is in the year-end stocktake article.

Sales channels and the till

Each channel leaks differently. Dine-in: invoices voided after cash has been collected — pull a daily void and correction report with a reason and shift manager approval. Takeaway: unrecorded orders. Delivery platforms: booking the net amount received as revenue.

The correct platform treatment is full order value as sales, platform commission as a selling expense, and any campaign discount you bear under the contract as a sales reduction or marketing cost. Recording only the net settlement understates your revenue and loses the commission deduction at the same time.

Tax obligations

The standard VAT rate is 10 percent and restaurant services fall within it. Two practical points. First, part of your purchases — unprocessed agricultural produce, bread, milk — is exempt, so the software must split taxable from exempt purchases or your input credit will be reversed on audit. Second, the service charge is part of the price of the service, must appear on the invoice, and forms part of the tax base.

Mandatory electronic invoicing filed to the taxpayer portal applies to restaurants too. The main task is mapping menu items to standard product identifiers; see the taxpayer system guide. Sales per the POS software, invoices in the portal and card terminal totals must reconcile monthly.

Payroll

Payroll is a large share of restaurant cost and this sector has the highest staff turnover of any trade. Written contracts, recorded hours and correct treatment of overtime and shift allowances are both a legal duty and your defence in a social security inspection. Part-time and hourly staff are still insurable; assuming otherwise is expensive.

Monthly numbers worth watching

• Prime cost and its trend over the last three months
• Food cost variance, theoretical against actual
• Average check per guest and daily covers
• Share and margin of each sales channel after commission
• Waste rate against sales

Key takeaways

• A restaurant is a manufacturer; without recipe cards your cost per plate is a guess.
• Theoretical versus actual food cost is the sharpest operational warning signal in this trade.
• Separate and document preparation, cooking and storage waste; undocumented shortages read as concealed sales.
• POS totals, portal invoices and card terminal turnover must agree every month.