A restaurant profit and loss statement, or P&L, summarizes income and expenses over a set period. It can show whether sales are covering food, payroll, rent, and other costs—and where results may need a closer look. Start by confirming the dates and accounting method, then compare each line with the same period last year or your budget. A single month can be affected by seasonality, holidays, or unusual repairs, so look for patterns rather than judging one number alone.
Start with Revenue
Look at total sales and how the statement divides them, such as food, beer, wine, and liquor. Check that sales match your point-of-sale reports and that discounts, refunds, comps, and sales taxes are recorded correctly. Sales tax collected from customers generally is not restaurant revenue; it is money held for payment to the tax authority.
Compare sales across periods and, when possible, by category or service channel. A rise in delivery sales may come with higher fees, while a drop in dine-in sales could reflect fewer covers or a lower average check. Use covers, average check, and menu mix to investigate changes instead of assuming that more revenue automatically means better results.
Review Food and Beverage Costs
Cost of goods sold (COGS) usually reflects the cost of ingredients and beverages used to generate sales. Review food and beverage costs separately if your P&L allows it. To understand food cost, compare the cost for the period with food sales; use the same approach for beverage cost. Your accounting records should reflect purchases and inventory consistently for the comparison to be meaningful.
If costs rise, check invoices, portion sizes, waste, spoilage, and menu prices. Also review inventory counts and how transfers or staff meals are recorded. A purchase-heavy month can look expensive if inventory increased, while missing or inaccurate counts can distort the period. Compare similar time frames and investigate specific items before changing recipes or prices.
Understand Labor Costs
Labor may include wages, overtime, employer payroll taxes, benefits, and contract labor. Confirm which items your P&L includes before comparing labor costs with sales. If payroll expenses appear unusually low, verify that all employees and pay periods are recorded and that payroll liabilities are handled correctly.
Review labor as a share of sales, but interpret it alongside hours worked, sales volume, and service needs. A busy shift may require more staff and still be efficient; a slower period can push the labor share higher even when schedules are reasonable. Compare scheduled hours with actual hours, and look for overtime, uneven staffing, or sales periods that do not match labor coverage.
Check Operating Expenses and Profit
Operating expenses can include rent, utilities, repairs, insurance, marketing, software, and payment processing fees. Read each category for unexpected changes, duplicate charges, and costs recorded in the wrong period. Separate recurring expenses from one-time items when you assess the trend, but keep both in view when planning cash needs.
After expenses, review operating income and net income, noting which costs are included at each point in your statement. Profit on a P&L is not the same as cash in the bank: loan principal payments, equipment purchases, and timing differences can affect cash without appearing as ordinary expenses. Follow up on unusual lines, confirm the records with your bookkeeper, and use the findings to set practical next steps.
Read your P&L in sequence: confirm sales, examine food and labor costs, then review operating expenses and profit. Compare consistent periods, verify unusual entries, and pair the statement with sales and staffing details before making changes. If you want help interpreting restaurant financials, Miami Restaurant Books can discuss your bookkeeping questions.