Key to Classifying Restaurant Expenses Correctly

Hi All,

I wanted to share a conversation I had with my client about classifying certain items as either capital expenditures (CAPEX) or operational expenses (OPEX).

We discussed whether items like cutlery, plates, glasses, cups, tablecloths, trays, menu holders, and tables should be categorized as CAPEX or OPEX. The client believed they should all be considered CAPEX since they last over a year. However, I replied that you are 100% correct that they do have a lifespan beyond one year, but their cost is minimal and doesn’t significantly impact the P&L. So, I suggest that these items are low-cost and can be easily replaced; they are more suitable to classify as OPEX. On the other hand, tables, due to their higher cost, can be classified as CAPEX.

What do you think?

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