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Restaurant P&L, line by line

What each line of a restaurant’s monthly profit and loss means, what goes in it, and what to look at first.

Updated

The short answer

A restaurant profit and loss (P&L) lists one period’s sales, then its costs in groups: food, labour, rent and bills, and everything else. Food plus labour is prime cost, the part you control most. Sales minus all costs is profit. Read each line as a share of sales, so months of different sizes compare.

The lines, top to bottom

  • Sales. Everything you sold in the period, before sales tax and tips. Neither is your money: tax goes to the government and tips go to staff.
  • Food cost. What you paid for food and drink in the period: supplier deliveries and food bills. It is what you bought, not what you served.
  • Labour. Wages for every hour worked, plus payroll taxes and benefits.
  • Prime cost. Food plus labour. It is the number most owners watch first, because those two costs move week to week with how the kitchen is run.
  • Rent and bills. Rent, utilities and the other costs of the building.
  • Other costs. Everything else: delivery-app fees, card fees, supplies, repairs, marketing.
  • Profit. Sales minus all of the costs above.

Beside each line, show its share of sales. A busy month and a quiet month have very different dollar figures, but 31% food cost means the same thing in both.

Example: one pizzeria’s month

These figures are an example, not a benchmark.

  • Sales: CA$62,000 (100%)
  • Food cost: CA$18,600 (30.0%)
  • Labour: CA$17,360 (28.0%)
  • Prime cost: CA$35,960 (58.0%)
  • Rent and bills: CA$7,440 (12.0%)
  • Other costs: CA$9,920 (16.0%)
  • All costs: CA$53,320 (86.0%)
  • Profit: CA$8,680 (14.0%)

Read it from the top. Prime cost at 58% leaves 42 cents of each sales dollar for everything else. Rent and bills take 12, other costs 16, and 14 cents is profit. If food cost had been 33% instead of 30%, the extra CA$1,860 would have come straight out of that profit.

What to look at first

  1. Is the month complete? A missing day of sales or an unentered delivery makes every percentage wrong. Check before you read anything else.
  2. Prime cost against your target. If it is high, see whether food or labour moved.
  3. Other costs. Delivery-app fees grow with delivery sales and are easy to miss, because food cost does not show them.
  4. The same days last month. Partway through a month, compare it with the same number of days last month, not the whole of last month.

How Mezbano helps

Mezbano builds the store’s profit and loss from what the team records: each day’s sales by channel, expenses with receipt photos, and labour hours and payroll. Saving the day’s sales adds delivery-app fees to expenses, and a supplier delivery can also count as a food-cost expense. The Profit and loss page shows sales, food cost, labour, prime cost, rent and bills, other costs and profit, each with its share of sales, for a calendar month. For the month in progress it compares the same days last month, and it warns when no food cost has been entered. Store owners and admins can download it as a CSV file for an accountant.

What Mezbano does not do here

  • Accounting-software exports: the profit and loss downloads as a CSV file.
  • A week or custom date range: the profit and loss is by calendar month.
  • Inventory counts, so food cost is what you bought, not what you used.

Questions owners ask

What goes in a restaurant P&L?

Sales for the period, then food cost, labour, rent and bills, and other costs such as delivery-app fees, supplies and repairs. Food plus labour is prime cost, and sales minus all costs is profit.

Should sales on a P&L include tax and tips?

No. Sales tax is collected for the government and tips belong to staff, so neither is your revenue. Mezbano records each channel’s sales before tax and tips.

Why is food cost on my P&L different from my recipe food cost?

The P&L counts what you paid for food in the month. Recipe food cost assumes every dish is made exactly to recipe. Waste, over-portioning, staff meals and price changes all sit in the gap.

How often should I look at my P&L?

Monthly at the least, once the month is complete. Many owners also look partway through the month, comparing it with the same days last month, so a problem shows up while there is still time to act.