How to Calculate Profit and Loss for a Restaurant ??
Here is how to Calculate profit & loss in Food Business with Step-by-Step process
Profit and loss management is just as important to running a restaurant as serving great food. To stay profitable and make smart business decisions, restaurant owners must understand how to calculate and interpret a profit and loss (P&L) statement effectively. A well-structured Profit and Loss statement provides insights into where the business is making money—and where it’s losing it.
Here’s a step-by-step guide to help you calculate your restaurant’s profit and loss.
1. Record Your Revenue (Total Sales)
Revenue is the total income your restaurant earns from all sources. Be sure to include:
- Food sales
- Beverage sales (both alcoholic and non-alcoholic)
- Takeout and delivery
- Catering services
- Merchandise or event revenue (if applicable)
Example:
Food Sales : $50,000
Beverage Sales : $10,000
Delivery/Take outs : $5,000
Total Revenue: $65,000
2. Calculate the Cost of Goods Sold (COGS)
Cost of goods used to produce all the food and beverage items. We can use simple formula where we take cost of opening stock plus cost of purchase minus cost of closing stock (COG=Opening Balance + Purchase – Closing Balance)
All goods associated with the sales must be recorded for this purpose
- Ingredients
- Beverages
- Packaging for takeout or delivery
Example:
Food Ingredients: $18,000
Beverages: $3,000
Packaging : $500.00
Total COGS: $21,500.00
✅ Formula: Gross Profit = Total Revenue - COGS Gross Profit = $65,000 - $21,500 = $43,500
3. Subtract Operating Expenses
Operating expenses cover the costs of running the restaurant’s day-to-day operations.There are two components of operating expenses
Fixed Expenses:
- Rent or lease payments
- Insurance
- Licenses and permits
- Depreciation of equipment and fixtures
- Loan repayments and interest
Variable Expenses:
- Staff wages and payroll taxes
- Utilities (gas, electricity, water)
- Marketing and advertising
- Cleaning and maintenance
- Technology (POS systems, accounting software)
- Taxes (sales tax, income tax, payroll tax)
Example:
Rent: $3,000
Salaries: $15,000
Utilities: $2,000
Marketing: $500
Other Operating Expenses: $1,000
Total Operating Expenses: $21,500
✅ Formula: Net Profit = Gross Profit - Operating Expenses
Net Profit = $43,500 - $21,500 = $12,000
If this number is negative, it indicates a net loss.
Refer to the excel file attached here which is eleborated into great details for a food compny based in UAE, operating at four locations and one head office
