Imagine you’re plating a perfect dinner: carefully seasoned, beautifully arranged, ready to impress. Now imagine watching a third of it get scraped into the trash. That’s what happens when restaurant owners miss out on valuable tax deductions.
These aren’t obscure technicalities or complicated write-offs. They’re everyday business expenses that can significantly reduce what you owe if you track and report them correctly.
From staff development and equipment upgrades to delivery service fees and marketing expenses, there are deductions built into nearly every part of your operation. But they only benefit you if you know they exist and keep your records in order.
Most restaurant owners want to focus on what matters most: running a smooth kitchen, serving great food, and keeping customers happy. Digging into tax rules often takes a backseat. But overlooking these deductions could mean sending thousands of dollars to the IRS that you could have kept in your business.
Whether you own a busy café, a family diner, or a growing franchise with multiple locations, understanding what you can deduct and how to stay organized throughout the year can help you save money and reduce stress when it’s time to file your income taxes.
Here are five common deductions that many restaurant owners miss, and simple steps to make sure you’re not leaving money behind.
|
Category |
Deductible Items / Costs |
Key Tracking Tips |
Notes / Pitfalls |
|
Employee Training |
Food safety, bartending/barista, management, culinary classes, and required certifications. |
Keep receipts, proof of payment, and employee notes; maintain training history. |
Small, incremental costs often get overlooked; a lack of documentation can result in a loss of deduction. |
|
Equipment & Supplies |
Ovens, grills, refrigerators, prep tables, blenders, furniture, and POS systems. |
Section 179: deduct full cost in the same year; track purchases and usage |
Must show profit to claim Section 179; phaseout above $4M; bonus depreciation can apply. |
|
Credit Card & Processing Fees |
Merchant fees (Square, Toast, etc.) |
Record gross sales and fees separately; use monthly statements; set rules in accounting software. |
Relying only on bank deposits underreports fees; can overpay taxes. |
|
Marketing & Advertising |
Social media ads, printed menus/flyers, signage, loyalty programs, sponsorships. |
Save invoices and proof of payment; categorize expenses; note the purpose of the spend. |
Disorganized tracking can miss deductions or lack IRS clarity. |
|
Online Delivery Fees |
Commission %, subscriptions, marketing boosts. |
Download monthly reports; track gross sales, fees, taxes, net deposits; separate accounting category. |
Misclassified or lumped with food costs, can overpay taxes, or misjudge profitability. |
Restaurants thrive when employees are well-trained, confident, and equipped to handle both the expected and the unexpected. Whether it’s food safety, customer service, or improving kitchen speed, ongoing training directly impacts your quality, consistency, and bottom line. It’s not just a smart investment—it’s also fully deductible as a business expense.
If the training helps your staff work smarter or adds value to your restaurant's offerings, it qualifies. You can pay for these courses directly or reimburse employees who complete them. Either way, the cost is deductible.
This also applies when training helps your business meet industry or health department standards. For example, if your city requires managers to complete a sanitation course every two years, those fees are not just necessary, they’re deductible.
To make sure the deduction holds up, you need to document three things:
It’s a good idea to keep a folder, digital or physical, for each employee’s training history. This makes it easy to reference and also helps you track your team’s development over time.
This deduction often gets overlooked because training happens in bits and pieces.
Maybe you cover a $90 course fee for a new hire, or pay for a manager’s annual certification. Those small amounts can get lost in the shuffle, especially if you're not using a system to track employee-related expenses. Without clear documentation, you could miss the deduction entirely if someone reviews your return.
Even if you only spend a few hundred dollars per employee each year on training, that adds up, especially when you multiply it across your whole team. By keeping organized records and claiming these costs properly, you reduce your income tax bill and build a stronger, more skilled team in the process.
Replacing a broken freezer or upgrading your kitchen line isn’t just part of running a restaurant—it’s often a major financial decision.
The good news?
Many of those equipment purchases can be fully deducted the same year you buy them, thanks to a tax provision called Section 179. This allows restaurants to recover the cost of large equipment purchases more quickly, which helps with cash flow and reinvestment.
Instead of spreading the deduction out over the lifespan of the item (which could be 5, 7, or even 15 years), Section 179 lets you deduct the full cost up front, as long as the equipment is placed in service that same year.
If it’s a physical item used in your day-to-day operations and expected to last more than one year, it likely qualifies.
This deduction can apply whether the equipment is new or used (as long as it's “new to you”), and whether you pay in full or finance it over time. As long as the equipment is purchased and put into use during the tax year, you can typically deduct the full cost.
There are a few rules restaurant owners need to be aware of:
Many restaurant owners overlook or underuse this deduction because they assume they have to spread depreciation over several years. But in most cases, using Section 179 or bonus depreciation provides a faster benefit and more flexibility to reinvest in other parts of the business.
These days, most customers pay with a card or mobile app, not cash. While that speeds up service and adds convenience, it creates problems if your bookkeeping doesn’t track the fees tied to those payments. Many restaurant owners lose out on this deduction simply because of how credit card sales get reported.
If you only record what hits your bank account, you’re likely underreporting your revenue and missing a key business expense: your payment processing fees.
Here’s a typical scenario:
But here’s the catch: you’re still responsible for reporting the full $100 as income on your tax return. That means you need to record the $3 fee as a separate business expense to avoid paying tax on money you never actually received.
This might not seem like a big deal for a single transaction, but it adds up fast. If your restaurant processes $500,000 in credit card sales annually and your average processing fee is 3%, that’s $15,000 in fees. If you don’t deduct it, you could be overpaying on your income taxes.
To make sure you’re capturing these expenses properly:
If you use a platform like QuickBooks, you can often set up automatic rules to split these transactions correctly once you connect your processor or import statements.
Marketing often feels like one of those never-ending costs, especially when you're experimenting with different strategies to bring in more foot traffic or build your online presence. Whether you’re boosting a Facebook post, printing flyers for a new promotion, or sponsoring a local food event, the good news is this: most of your marketing and advertising expenses are fully deductible.
Marketing isn’t just about flashy campaigns—it’s anything you do to promote your business, attract new customers, or keep your current ones coming back.
To make the most of these deductions, organization is key. Here’s how to stay on top of it:
It’s also helpful to keep short notes about the purpose of each spend. For example, if you sponsor a local charity event, note the sponsorship details (logo on signage, free food for attendees, etc.) to clearly demonstrate your business's connection.
For many restaurants, delivery apps like DoorDash, Uber Eats, and Grubhub are now a permanent part of doing business. They help expand your reach, bring in new customers, and offer convenience, but they also come at a cost. And that cost can be steep.
What often surprises restaurant owners is how high the fees actually are, and how easily they get buried in the books. In many cases, these expenses are accidentally lumped in with food costs or overlooked entirely, which means you’re missing out on a legitimate deduction and possibly misjudging your profit margins.
Online delivery services typically charge restaurants in a few different ways:
All of these fees are fully deductible, but only if you’re separating them correctly in your records. If you group these fees under “cost of goods sold” or fail to record them at all, you likely overpay in taxes and miss the opportunity to evaluate how well these platforms actually perform.
Let’s say you make $10,000 in delivery sales through one platform in a month. If that platform takes a 25% fee, you’re paying $2,500 just to be listed and have your orders processed. That’s a significant cost, and if you don’t track it separately, you miss out on a valuable deduction and a clear view of whether the service is truly profitable.
When you record delivery fees correctly:
Here’s how to keep these costs organized and easy to track:
If delivery is a core part of your business model, treat it like any other sales channel. That means tracking what it costs, measuring how it performs, and ensuring you record and deduct every related expense accurately.
With clear tracking and a bit of monthly attention, you’ll avoid leaving valuable deductions on the table and gain a clearer view of how delivery fits into your overall profitability.
Running a restaurant is full of tough decisions, tight margins, and long days. The last thing you want is to miss legitimate tax deductions just because you didn’t track or categorize them correctly. From employee training and equipment purchases to delivery platform fees and marketing costs, these overlooked deductions can add up fast and make a real difference in your bottom line.
At TMA Accounting, we work closely with restaurant owners to help simplify your systems, stay organized, and keep more of what you earn. Our goal is to help you reduce surprises at tax time, stay out of compliance trouble, and free up your time and attention to focus on growing your business.
If you’re unsure whether you’re taking full advantage of the deductions available to you, we’re here to help.
Reach out today to schedule a quick conversation with our team and see how we can support your success—without the guesswork.