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Accounting for staff meals

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Dear Advice Guy,

We offer 40% off staff meals but how do I record that for accounting purposes?

– John Fuentes, Owner, Fuentes Café Downtown, San Angelo, TX


It is important to properly account for employee meals for a few reasons: to accurately calculate food-cost percentages, to paint a more accurate picture of revenues, and to be clear on employee benefits for expense and tax purposes. For example, Deborah Schwartz, a tax accountant with James Banks Inc. in Beverly Hills, Calif., advises, “If [a free staff] meal is served on premises during work hours or before or after a shift where the employees are working through meal times, the cost of the food would be 100 percent tax deductible.”

As to the mechanics of setting this up in the POS, Mary Sigel, from Sigel and Associates in Berwyn, Penn. says, “The best way to record is to add a category in comps that reflects 'Employee Meals' and program it (or have the POS company program it) as an automatic 40 percent off [in your case]. When the meal is rung in, it is reflected under food sales as a gross figure with the discount below prior to net sales."


41500Food sales  
41600Liquor sales  
41700Wine sales  
41800Beer sales  
41900Misc. sales  
 Total income  
  49007Manager comp.
  49008Employee meals
   Total discounts
 Net income  

More on staff meal accounting here.

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