The Restaurant P&L Guide

By Rob Bruni, founder of OpsEdge Hospitality, twenty years running restaurants, bars, clubs and resorts. Updated November 2026.

Free printable: Weekly Prime Cost Close checklist (PDF)

The profit and loss statement is the one report every owner reads and most managers never see. It tells you whether the operation made money, but by the time it lands the month is over. This guide explains how a restaurant P&L is built, what each line should be as a percent of sales, how to read one in ten minutes, and how to pull the controllable lines forward into a weekly number you can act on.

What a restaurant P&L is for

A P&L (also called an income statement) lists everything you sold in a period, everything it cost, and what was left. Its job is to answer three questions: Did we make money? Where did the money go? What changed from last period?

The useful version is not the one your accountant produces for taxes. It is a management P&L, laid out so a general manager can see the operation in the numbers: sales by category, cost of goods by category, labor split by department, controllable costs separated from occupancy, and every line expressed as a percent of sales so months of different sizes can be compared.

How a restaurant P&L is laid out

A management P&L runs top to bottom in this order. The structure is more important than the exact account names.

1. Sales. Food, beverage (ideally liquor, beer and wine separately), and other (retail, room hire, catering). Net of comps, voids and discounts, before sales tax.
2. Cost of goods sold. Food cost and beverage cost, each from inventory (beginning plus purchases minus ending), each as a percent of its own sales.
3. Gross profit. Sales minus cost of goods sold.
4. Labor. Hourly wages by department (front of house, back of house), salaried management, payroll taxes, benefits and workers' comp. Fully loaded.
5. Prime cost. Cost of goods sold plus labor. The single most important subtotal on the page. See the prime cost guide.
6. Controllable expenses. Everything a manager can influence week to week: supplies, smallwares, linen, repairs and maintenance, marketing, music, utilities, credit card fees, delivery commissions, cleaning.
7. Controllable profit. Gross profit minus labor minus controllable expenses. This is the number a manager should be judged on.
8. Occupancy and fixed costs. Rent, property tax, insurance, loan payments, depreciation. Set when you signed the lease, not something the floor can change.
9. Net operating profit. What is left. Before owner draws and income tax.

The lines that matter, and what they should be

Ranges for a full service restaurant. Quick service runs lower labor and lower occupancy; fine dining runs higher labor. All as a percent of total sales unless noted.

Line	Typical range	What moves it
Food cost (of food sales)	28 to 34%	Pricing, portions, waste, purchasing. Food cost guide
Beverage cost (of beverage sales)	18 to 24%	Pour size, variance, pricing. Pour cost guide
Total labor, fully loaded	30 to 35%	Scheduling to forecast, overtime, management. Labor cost guide
Prime cost	60 to 65%	The sum of the three above
Controllable expenses	8 to 12%	Supplies, repairs, marketing, utilities, card fees
Controllable profit	18 to 25%	What is left before occupancy
Occupancy	6 to 10%	Rent, taxes, insurance. Above 10% is hard to outrun
Net operating profit	5 to 12%	Independent full service. Quick service and bars can run higher

Three things to watch beyond the ranges. Credit card fees at 2.5 to 3.5 percent of sales are now one of the larger controllable lines and often buried in bank charges. Delivery platform commissions of 15 to 30 percent of delivery sales belong on their own line, not netted out of sales. And any line that moved more than one point from last month deserves a sentence of explanation before the meeting ends.

A worked example

This is a healthy month. Prime cost is in range, controllable profit is strong, and occupancy is under 10 percent. If the same restaurant posted a 68 percent prime cost the next month, net profit would fall to about $26,000 with nothing else changing, which is the whole argument for watching prime cost weekly instead of discovering it here.

How to read a P&L in ten minutes

1. Sales first, by category, against last month and last year. Is the top line up or down, and is the mix shifting? A beverage share that drops from 28 to 24 percent explains a lot of what follows.
2. The three prime cost lines as percentages. Food of food sales, beverage of beverage sales, labor of total. Which one moved, and by how much?
3. Prime cost total. In range or not. If not, you already know which line to go to.
4. Controllable expenses line by line. Anything over budget by more than 10 percent gets a question. Repairs and maintenance is the usual surprise.
5. Controllable profit. This is the manager's number. Compare it to budget and to the same month last year.
6. Net profit last. It is the owner's number, and by the time you get here you should already know why it is what it is.

Write down the three biggest variances and one action for each. A P&L review that ends without actions was a reading, not a review.

Why the monthly P&L is too late, and what to do weekly

A monthly P&L usually arrives two to three weeks after the month closes. A problem that started in the first week of the month is six or seven weeks old by the time it is visible, and the money is gone. The fix is not a faster accountant. It is pulling the controllable lines forward into a weekly number the operation produces for itself.

The weekly version is short: sales by category, food and beverage purchases (adjusted for a weekly count of the top items), labor fully loaded, and prime cost. That is four numbers and a total, it takes about 30 minutes on Monday, and the free weekly Prime Cost Check sheet does the arithmetic. The monthly P&L then becomes a confirmation of what you already knew, rather than the first time you hear it.

Common P&L mistakes

• Food cost from purchases instead of inventory. A big delivery on the 30th inflates this month's cost and flatters next month's. Count at month end, every month.
• Labor without the burden. Wages only, with taxes and benefits scattered in other accounts. Pull them together under labor or the number is wrong by three to five points.
• Percentages against the wrong base. Food cost against total sales, beverage cost against total sales. Both hide problems.
• Sales tax in sales. It is not your money. Net it out before anything is calculated.
• Delivery commissions netted out of sales. This understates sales and hides a 20 percent cost. Show gross delivery sales and the commission as its own line.
• No budget column. Actual against nothing is just a list. Actual against budget and against last year is a report.
• Managers never see it. The people who can move the controllable lines are the last to see them. Share the controllable section, at minimum, with every manager every month.

Our Playbooks and Toolkits include the restaurant P&L template and the annual budget workbook we use, and the Prime Cost System page covers the weekly layer that sits on top of them.

Related guides and tools

A P&L is only as good as the books behind it. The restaurant bookkeeping guide covers the daily sales report, weekly invoices and the month end close that produce these numbers.

FAQ

What is a good profit margin for a restaurant?

Independent full service restaurants typically net 5 to 12 percent of sales after all costs. Quick service and bar-led concepts can run higher. The number most within a manager's control is controllable profit, which runs 18 to 25 percent in a healthy full service operation.

What is the difference between gross profit and net profit in a restaurant?

Gross profit is sales minus cost of goods sold (food and beverage). Net profit is what is left after labor, controllable expenses and occupancy costs are also taken out. A 70 percent gross margin can easily become a 5 percent net margin.

What is controllable profit?

Controllable profit is gross profit minus labor and controllable expenses, before rent and other fixed costs. It measures the lines a manager can actually influence, which makes it the fairest number to judge management performance on.

How often should a restaurant review its P&L?

Monthly for the full statement, and weekly for the controllable lines (sales, food and beverage cost, labor, prime cost). The monthly P&L arrives too late to change the month it describes.

Should rent be included in prime cost?

No. Prime cost is cost of goods sold plus labor only. Rent and other occupancy costs are fixed when the lease is signed and are shown further down the P&L, after controllable profit.

What percentage of sales should rent be for a restaurant?

Six to ten percent of sales is the usual range. Above ten percent is difficult to sustain without very strong sales or very low prime cost, and it is one of the first things to check before signing a lease.