Insights / Restaurant profitability
Restaurant profit and loss statement
The line-by-line format, what belongs in each account and what does not, a worked period close, and a blank template you can copy or download. No email required.
Published by Back of House Accounting · Principal: Douglas Carpenter, CPA, CFA · Last updated 26 September 2026
What is a restaurant profit and loss statement?
A restaurant profit and loss statement — also called a restaurant income statement, or simply a P&L — reports sales, cost of sales, labor, operating expenses and profit for one defined trading period. It is the same document a general business produces, with three differences that matter.
First, it carries a prime cost subtotal: cost of sales plus total labor, the two lines a restaurant actually controls week to week. Second, it is usually closed on a four-week period calendar rather than a calendar month, so that every period contains the same number of Fridays and Saturdays. Third, sales tax is not revenue and never appears in net sales, which is the single most common error on an owner-prepared P&L.
The format is not a matter of taste. The industry has a published standard: The Uniform System of Accounts for Restaurants (USAR), published by the National Restaurant Association, which defines the account structure, the subtotals and the order they appear in. Hotels have the equivalent in USALI. A P&L built on the standard can be compared to another operator's, handed to a lender without translation, and consolidated across units without rework. One built on whatever the bookkeeper set up in year one usually cannot.
The format
What goes on a restaurant P&L, line by line
Every account in the standard structure, what belongs in it, and the thing most often put there by mistake.
| Line | What belongs in it | What does not |
|---|---|---|
| Net sales | Food, beverage, retail and other revenue, after comps, voids, promotions and discounts | Sales tax collected, tips, service charges paid over to staff, gift cards before redemption |
| Cost of sales | ||
| Food cost | Product used in the period: opening inventory + purchases − closing inventory | Product purchased but still on the shelf; paper and packaging; employee meals if tracked separately |
| Beverage cost | Same calculation, split liquor / beer / wine / non-alcoholic where the POS supports it | Bar smallwares, glassware, garnish supplies (these are direct operating) |
| Labor | ||
| Hourly — kitchen | Back-of-house wages at gross, including overtime | Employer payroll taxes (they belong below, in taxes and benefits) |
| Hourly — front of house | Server, bar, host and busser wages at gross | Tips paid out to staff; they are not the restaurant's expense |
| Salaried management | GM, chef and assistant manager salaries, plus earned bonus accrual | Owner compensation, unless the owner works a defined operating role and is paid a market wage for it |
| Taxes and benefits | Employer FICA, FUTA and SUTA, workers' compensation, health insurance, PTO accrual | The employee's own withholding, which is part of gross wages already counted above |
| Prime cost | Cost of sales + total labor. The single most important subtotal on the statement. | Anything fixed. Rent is not part of prime cost. |
| Controllable expenses | ||
| Direct operating | Smallwares, china, glass and silver, cleaning supplies, uniforms, laundry, menus, paper and packaging | Repairs to equipment (separate line), and anything capitalised |
| Marketing | Advertising, agency and design fees, third-party delivery commissions if you treat them as marketing, loyalty program cost | Discounts and comps — those already reduced net sales at the top |
| Utilities | Electricity, gas, water and sewer, waste removal, telephone and internet | Common-area charges billed by the landlord (those are occupancy) |
| Repairs and maintenance | Equipment service contracts, HVAC, plumbing, pest control, small repairs | Capital improvements and equipment replacement |
| General and administrative | Office costs, bank and merchant processing fees, professional fees, software subscriptions, insurance other than property | Corporate or multi-unit overhead in a group — keep that below restaurant-level profit |
| Occupancy | ||
| Rent and occupancy | Base rent, percentage rent, CAM, property insurance, real-estate tax, and commercial rent tax where it applies | Equipment leases, which usually sit in direct operating or below the line depending on the lease |
| Restaurant-level EBITDA | What the four walls produced before ownership decisions. This is the number a buyer or lender looks at first. | — |
| Below the line | ||
| Non-operating | Depreciation and amortization, interest, corporate overhead allocation, owner distributions, income tax | Anything an operator can change this week. Keeping these below the line is what makes units comparable. |
| Net income | The bottom line after everything above | — |
Account structure follows the Uniform System of Accounts for Restaurants. Where the standard allows a choice — third-party delivery commission, for instance — pick one treatment and never change it mid-year, or your period comparisons stop meaning anything.
Ungated, no email
Restaurant P&L template, worked example and printable PDF
The blank structure above, ready to fill in. Download the Excel workbook with the subtotals, prime cost and percentage column already built as formulas, take the plain CSV, or print the PDF and fill it in by hand. There is also a completed example with real figures if you would rather see one filled in first. No email, no sign-up, nothing gated.
Line,Amount,% of net sales NET SALES,,100.0% Food sales,, Beverage sales,, Other revenue,, COST OF SALES,, Food cost,, Beverage cost,, GROSS PROFIT,, LABOR,, Hourly - kitchen,, Hourly - front of house,, Salaried management,, Payroll taxes and benefits,, PRIME COST (cost of sales + labor),, CONTROLLABLE EXPENSES,, Direct operating,, Marketing,, Utilities,, Repairs and maintenance,, General and administrative,, OCCUPANCY,, Rent and occupancy,, RESTAURANT-LEVEL EBITDA,, BELOW THE LINE,, Depreciation and amortization,, Interest,, Corporate overhead,, NET INCOME,,
What is in the Excel file. Three sheets. P&L is a single period with every subtotal, prime cost and the % of net sales column written as live formulas, so you type only the indented white rows. 13 Periods is the same statement across thirteen four-week periods with a year column. How to read it is a one-page explanation you can hand to a manager. It opens in Excel, Google Sheets, Numbers and LibreOffice.
The printable PDF. Two pages: a blank template you can print and fill in by hand, and the completed example below laid out the same way. Useful if you want the structure on paper in front of you, or need to hand a manager something that is not a spreadsheet.
Prefer to see one already filled in?
Most people searching for a restaurant P&L template actually want to see a finished one first. This is the worked period below — a single unit at roughly $7.8m a year, closed on a 4-4-5 calendar — as a file you can open, with every subtotal, prime cost and the percentage column written as live formulas. Overwrite the figures with your own and it becomes your statement. Figures are illustrative; the structure is exact.
Two rules when you fill it in. Net sales excludes sales tax. Food and beverage cost is product used, not product bought — if you post purchases straight to cost of sales, a big delivery on the last day of the period will make a good period look bad and the next one look better than it was.
Worked example · period 8 of 13
A closed period P&L
A single unit doing roughly $7.8m a year, closed on a 4-4-5 calendar so week counts are comparable period to period and year to year. Figures illustrative; structure exact.
| Period 8 (4 weeks) | Actual | % sales | Budget % | Prior yr % |
|---|---|---|---|---|
| Net sales | 601,480 | 100.0% | 100.0% | 100.0% |
| Cost of sales | ||||
| Food | 181,046 | 30.1% | 29.8% | 30.0% |
| Beverage | 38,495 | 6.4% | 6.2% | 6.3% |
| Labor | ||||
| Hourly — kitchen | 96,838 | 16.1% | 15.8% | 15.9% |
| Hourly — front of house | 66,764 | 11.1% | 11.0% | 11.2% |
| Salaried management | 27,668 | 4.6% | 4.6% | 4.7% |
| Taxes and benefits | 22,255 | 3.7% | 3.6% | 3.7% |
| Prime cost | 433,066 | 72.0% | 71.0% | 71.8% |
| Controllable and occupancy | ||||
| Direct operating | 33,684 | 5.6% | 5.5% | 5.6% |
| Marketing | 12,030 | 2.0% | 2.0% | 1.9% |
| Utilities | 18,044 | 3.0% | 2.9% | 3.0% |
| Repairs and maintenance | 9,022 | 1.5% | 1.5% | 1.4% |
| Rent and occupancy | 48,118 | 8.0% | 8.0% | 8.2% |
| General and administrative | 18,044 | 3.0% | 3.0% | 3.1% |
| Restaurant-level EBITDA | 29,472 | 4.9% | 6.1% | 5.0% |
Read it in one line: prime cost is one point over budget, and one point of prime cost on this volume is about $6,000 a period, or $78,000 a year. That single point is most of the gap between the 6.1% EBITDA the budget promised and the 4.9% the period delivered.
The skill nobody teaches
How to read a restaurant P&L
Read the percentage column, not the dollar column. Dollars tell you how big the period was. Percentages tell you whether it was run well — and a period with higher sales and a worse food cost percentage is a period you lost ground in.
Read it in this order, and stop at the first thing that moved
- Net sales — against the same period last year and against budget. Never against last month: on calendar months the weekend count changes, so a month with five Saturdays looks like growth when trade is flat.
- Prime cost — cost of sales plus total labor, including employer payroll taxes and benefits. These are the only two cost groups you can change inside a week, which is why this subtotal exists on a restaurant P&L and not on a generic one. The full calculation and the usual errors.
- Restaurant-level EBITDA — what the four walls produced before financing and corporate. This is the number a lender, a landlord or a buyer looks at first.
- Everything below it — occupancy, depreciation, interest, overhead. These move slowly and are mostly already committed, so they are the last place to look for an explanation and the last place you can fix one.
Four lines, in that order. If prime cost is where the gap is, nothing further down the statement will explain it, and nothing further down can fix it this period.
If a percentage moved, this is where to look first
| What the P&L shows | Where the cause usually is |
|---|---|
| Food cost % up, sales flat | Closing inventory counted on a different day from the period cut-off; vendor increases never repriced on the menu; waste and over-portioning; or purchases posted straight to cost of sales instead of usage. Food cost percentage, properly calculated. |
| Food cost % down sharply | Treat this as an error before you treat it as a win. Almost always a count or cut-off problem: a delivery received after the count, or closing inventory overstated. |
| Beverage cost % up | Pour accuracy, comps and spill far more often than purchasing. Work out the pour cost by bottle. |
| Labor % up, sales flat | Scheduled hours against the sales forecast, overtime, and salaried managers covering hourly shifts. Labor cost percentage and what belongs in it. |
| Labor % down, service complaints up | Understaffing. It flatters this period's P&L and shows up in next period's sales line. |
| Prime cost % up, both halves look normal | Employer payroll taxes and benefits landed in the wrong period, or a quarter-end tax true-up hit one period in full. What belongs in restaurant payroll taxes. |
| Sales up and every cost % improved at once | Sales tax left inside net sales. It inflates the denominator, so every percentage on the statement looks better than it is. Reconciling sales tax to the POS. |
| Controllable expenses spike in one period | A repair that is really a capital item, or an annual insurance, licence or software bill posted in one period instead of accrued across the year. |
| Occupancy % moves at all | Base rent does not move. Percentage rent, a CAM reconciliation or a landlord true-up does. |
| EBITDA is fine but cash is tight | The P&L is not the problem. Timing is: sales tax and payroll due dates, merchant settlement lag, delivery platform remittance, inventory build. Where restaurant cash flow gaps open, and the 13-week forecast that shows them coming. |
One habit worth more than any benchmark: whenever a percentage surprises you, check whether the number moved or whether the accounting moved. In a restaurant it is the accounting about half the time — a cut-off, a count, an accrual or a mapping — and chasing an operational cause for an accounting problem costs a whole period.
Better than a benchmark
How to set your own targets instead of borrowing someone else's
Published industry percentages are averages of restaurants that are not yours. Your prime cost ceiling is arithmetic, and you can calculate it in five minutes.
Work backwards from the profit you need rather than forwards from a benchmark. Take annual sales, subtract the profit you require, and subtract every cost that does not move with volume. Whatever is left is the most you can spend on food, beverage and labor combined — your prime cost ceiling.
| Using the example above, annualised | Amount | % sales |
|---|---|---|
| Net sales (13 periods) | $7,819,240 | 100.0% |
| Profit required by the owner | −$469,154 | 6.0% |
| Occupancy | −$625,539 | 8.0% |
| Controllable expenses (direct operating, marketing, utilities, R&M, G&A) | −$1,180,705 | 15.1% |
| Prime cost ceiling | $5,543,842 | 70.9% |
| Prime cost actually run | $5,629,858 | 72.0% |
| Annual shortfall against the owner's own target | −$86,016 | 1.1 pts |
That is a more useful number than any benchmark, because it is derived from this restaurant's own rent, own fixed costs and own owner's requirement. A concept with 5% occupancy can run 74% prime cost and still make money. A concept with 12% occupancy cannot run 68%. The average tells you nothing about which of those you are.
Once you have the ceiling, split it between cost of sales and labor the way your menu and service model actually demand, then hold the total. How prime cost is calculated covers the split and the mistakes that distort it.
Delivered Tuesday, 9am
How often should a restaurant close its P&L?
A period P&L every four weeks, and a weekly flash in between. A monthly P&L on its own arrives too late to change anything it reports.
A calendar month contains four or five weekends depending on where it falls, so a five-weekend month looks like growth and a four-weekend month looks like decline when nothing has changed. A 4-4-5 period calendar — thirteen periods of four weeks, with a fifth week added to one period each quarter — removes that distortion and makes period-on-period and year-on-year comparison honest.
Between closes, the flash report carries the five numbers that move. It is not a P&L and does not need to reconcile; it needs to arrive four days after the week ends, while the week it describes can still be acted on.
| Week 32 · ended Sunday | Actual | Budget | Var | Last year | vs LY |
|---|---|---|---|---|---|
| Net sales | $148,320 | $142,000 | +4.5% | $136,900 | +8.3% |
| Covers | 3,104 | 3,020 | +2.8% | 2,986 | +4.0% |
| Average check | $47.78 | $47.02 | +1.6% | $45.85 | +4.2% |
| Food cost | 31.4% | 29.8% | +1.6 pts | 30.1% | +1.3 pts |
| Labor cost | 33.9% | 33.2% | +0.7 pts | 33.4% | +0.5 pts |
| Prime cost | 65.3% | 63.0% | +2.3 pts | 63.5% | +1.8 pts |
| Theoretical vs actual food | −$2,380 | — | — | — | — |
| Comps, voids and discounts | 2.8% | 2.0% | +0.8 pts | 2.1% | +0.7 pts |
What the flash says that the P&L cannot
Sales beat budget 4.5% on covers, not price. Prime cost is 2.3 points over budget and the whole of it is food. Theoretical usage says $2,380 of product left the building without a corresponding sale, and comps and voids ran 0.8 points high in the same week — those two figures are probably the same story. That is actionable on the Tuesday. On a month-end P&L it would surface in late October as an unexplained food variance.
The weekly sales line is also the input a 13-week cash flow forecast runs on.
Six things that make a restaurant P&L misleading
- Sales tax counted as revenue. Tax you collect is money held for the state, not a sale. Leaving it in net sales inflates the top line and makes every cost percentage below it look better than it is.
- Cost of sales taken from purchases instead of usage. Without an opening and closing inventory count, cost of sales is just the delivery schedule. A large last-day delivery ruins one period and flatters the next.
- Tips run through the P&L. Tips belong to staff and pass through a liability account. Running them as revenue and then as wage expense doubles the size of the restaurant on paper and distorts labor percentage. Service charges are different — they are revenue, and the distinction has payroll consequences.
- Comps and discounts hidden. Netted silently into sales, they disappear. Shown as a reduction from gross sales, they become a number someone owns.
- No employer payroll tax accrual. Employer FICA, unemployment insurance and workers' compensation are real labor cost. Omitting them understates labor by roughly a tenth of the wage line. What belongs in restaurant payroll taxes.
- Owner compensation moving around. If the owner works a shift, pay a market wage for it above restaurant-level EBITDA. If the owner takes a distribution, it belongs below the line. Mixing the two makes the unit impossible to compare, value or lend against.
Common questions
Restaurant P&L questions
Is a restaurant profit and loss statement the same as an income statement?
Yes. Profit and loss statement, P&L and income statement are three names for the same report. Restaurant operators generally say P&L; lenders, investors and formal financial statements generally say income statement. The content is identical.
Does a restaurant P&L include sales tax?
No. Sales tax collected from guests is a liability owed to the state, not revenue, and it does not appear in net sales. It sits on the balance sheet until it is remitted. Including it inflates sales and makes food cost, labor cost and prime cost percentages all appear lower than they really are.
What is prime cost on a restaurant P&L?
Prime cost is cost of sales plus total labor, including employer payroll taxes and benefits, expressed against net sales for the same period. It is the subtotal that separates a restaurant P&L from a generic one, because it isolates the two cost groups an operator can change inside a week. Full calculation and the common errors.
What is a 4-4-5 calendar and why do restaurants use it?
A 4-4-5 calendar divides the year into thirteen four-week periods, with a fifth week added to one period each quarter to keep the year at 52 or 53 weeks. Because every period contains the same number of weekends, sales and cost percentages become comparable period to period and year to year. Calendar months do not have that property: a month with five Saturdays looks like growth even when trade is flat.
Should tips appear on the profit and loss statement?
Tips paid by guests to staff do not belong on the P&L. They pass through a liability account from receipt to payout. Mandatory service charges are different: they are the restaurant's revenue, they are wages when distributed, and they carry employer payroll tax. The FICA tip credit and Form 8027 both turn on getting this distinction right.
What P&L format do multi-unit restaurant groups use?
The same structure, with two additions. Each unit is reported to restaurant-level EBITDA on identical account mapping so units can be ranked against each other, and corporate overhead is held in a separate column below that line rather than allocated into the units. Allocating overhead into units makes a strong unit look average and hides which sites actually work. How a consolidated group pack is structured.
Is there a free restaurant P&L template in Excel?
Yes — the Excel workbook on this page, with no email and no sign-up. Every subtotal, prime cost and the % of net sales column are live formulas, so you type only the indented rows. It has a single-period sheet, a thirteen-period sheet with a year column, and a one-page explanation you can hand to a manager. There is a plain CSV too if you would rather build your own formatting on top of the structure.
How do you calculate profit and loss for a restaurant?
Start from net sales excluding sales tax. Subtract cost of sales — product used, which is opening inventory plus purchases minus closing inventory, not product bought — to get gross profit. Subtract total labor, including employer payroll taxes and benefits, then controllable expenses, then occupancy, and you have restaurant-level EBITDA. Subtract depreciation, interest and corporate overhead to reach net income. The one subtotal a generic calculation leaves out is prime cost: cost of sales plus labor, the two groups you can actually change inside a week.
What percentages should a restaurant P&L show?
Every line as a percentage of net sales, in a column beside the dollars, with prime cost shown as its own subtotal. What those percentages should be is a different question, and borrowed answers are usually worse than no answer: published figures mix quick service with fine dining, tipped with non-tipped and high-rent urban with suburban. Compare each percentage against your own trailing thirteen periods, your own budget and the same period last year. Those three comparisons tell you whether the period was good; an industry average cannot.
What does a restaurant profit and loss statement look like?
Revenue at the top split into food, beverage and other; cost of sales; gross profit; labor; prime cost; controllable expenses; occupancy; restaurant-level EBITDA; then depreciation, interest and overhead down to net income — with a percentage-of-net-sales column running alongside. The blank structure and a closed period with real figures in it are both above on this page, and the same layout is in the downloadable workbook.
Sources and further reading
- The Uniform System of Accounts for Restaurants — National Restaurant Association. The published standard for restaurant account structure and statement format.
- IRS Form 8027 — Employer's Annual Information Return of Tip Income and Allocated Tips.
- IRS Form 8846 — Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.
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