Profit First 5 Accounts: A Simple System for Hospitality Businesses

The Profit First 5 Accounts Explained

Big companies with finance teams can prepare daily cashflows, forecasts, and endless reports. But for most independent hospitality businesses - restaurants, cafés, bars, and hotels - that level of financial analysis simply isn’t realistic.

Management accounts are useful, but they’re always a snapshot of the past. To take real control in the present, you need a simpler, practical system that works day-to-day. That’s where the Profit First 5 Accounts method comes in.

Every pound that comes into your business should have a purpose. Instead of letting it all sit in one account - and risking overspending - the Profit First system encourages you to split money into separate accounts.

Modern banks like Starling and Monzo make this easy with “pots” or sub-accounts, so you can move money automatically each week or month.

This simple shift gives you a live, real-time picture of whether you’re on track financially, long before your accountant produces management accounts.

The Profit First 5 Accounts Explained

Here’s how the system works for hospitality businesses:

1. Profit Account

   • The first slice of every sale goes here. Profit comes first - not last.

   • This builds a financial buffer and ensures you’re rewarded for the risk of running your business.

     
     

2. VAT Account

   • Remember: VAT isn’t your money. You’re just collecting it for HMRC.

   • By moving VAT into its own account, you’ll never be caught short when the tax bill arrives.

     
     

3. Owner’s Pay Account

   • Too many hospitality owners pay themselves last (or not at all).

   • This account ensures you’re consistently paid for your time and effort.

     
     

4. Staff Pay Account

   • Covers wages, pensions, and PAYE.

   • Example: If your labour target is 30% and monthly sales are £100k, you should have £30k in this account by month-end.

     • £28k? You’ve overspent.

     • £35k? You’ve beaten target.

       
       

5. Operating Expenses Account

   • This covers rent, utilities, marketing, and all the other day-to-day running costs.

   • It keeps overheads separate from staff and supplier costs so you don’t overspend.

Many hospitality businesses also create a Supplier Account for food and drink purchases. If your gross profit (GP) target is 70%, then 30% of sales should sit in this account.

If there isn’t enough to pay invoices at the end of the month, you’ve lost money somewhere - maybe through wastage, refunds, or miscalculated costs.

This system gives you a clear, live view of cash flow. You can instantly see if you’re overspending on staff, suppliers, or overheads, and avoid nasty surprises when VAT or payroll comes due. You move from reactive financial management to proactive decision-making – and you don’t need to wait for accountants’ reports to know if you’re making money.

The Profit First 5 Accounts system is a game-changer for independent restaurants and hospitality businesses. By separating your cash into clear, purposeful accounts, you’ll always know where you stand - and you’ll never be caught off guard.

At Profit First Hospitality, we specialise in helping restaurant and hospitality owners implement this system successfully, tailored to the realities of the industry. Looking to set up the Profit First 5 Accounts in your business? Get in touch and we’ll show you how to take back control of your cash flow.