How to Read a Restaurant Profit and Loss Statement?

This guide will walk you through the basics of a restaurant P&L, why it matters, and how to make smarter decisions based on it.

Running a restaurant in Australia isn’t all about plating up beautiful food and wowing guests; it’s also about making sure your numbers add up at the end of the day. And one of the most important tools to understand how your restaurant is actually performing is the Profit and Loss Statement, often called the P&L.

Don’t worry, it’s not as scary as it sounds. In fact, once you get the hang of reading a P&L, it’s like having a financial map that shows you where you're making money and where it's quietly slipping through the cracks (probably down the sink with that spoiled salmon).

So let’s break it down in plain Aussie English. 

What Is a Restaurant Profit and Loss Statement?

A Profit and Loss Statement is basically a summary of your restaurant’s revenue, expenses, and profit (or loss) over a specific period, usually weekly, monthly, or quarterly.

It answers the big question:
“Are we actually making any money?”

For restaurant owners, it’s essential to track this regularly so you can spot problems early, adjust pricing, control food costs, and ultimately avoid the dreaded scenario of working 60 hours a week and still being broke.

Why It Matters

Your P&L statement isn’t just a bunch of numbers for your accountant to deal with once a year. Here’s what it helps you do:

• Understand where your money is coming from and going
• Track food and labour costs (your two biggest expenses)
• Identify profitability by menu item or service style (dine-in vs takeaway)
• Plan for future investments or expansion
• Spot theft, waste, or inefficiencies
• Stay in the good books with the ATO (seriously, don’t mess that up)

The Main Sections of a Restaurant P&L (Explained Like a Human)

1. Revenue (a.k.a. Sales)

This is the total money that comes into the restaurant before you pay for anything. It includes:

• Food sales
• Beverage sales (alcoholic and non-alcoholic)
• Takeaway or delivery income
• Catering (if you do it)
• Other sales like merch or gift vouchers

📌 Tip: Separate your income sources if you can. It helps you see what’s really working. If your brunch sales are booming but dinner is dead, that’s good to know.

2. Cost of Goods Sold (COGS)

This is what you spend to make the food and drinks you sell. It includes:

• Ingredients
• Beverage inventory
• Packaging (for takeaways or delivery)
• Condiments, sauces, garnishes

COGS is usually expressed as a percentage of sales, and that’s a key number to track. In most Aussie restaurants:

• Food cost % should be between 28% to 35%
• Beverage cost % can range from 20% to 30%

💡 COGS formula:

(Opening Stock + Purchases – Closing Stock) / Sales x 100

If this percentage is too high, you might be overordering, underpricing, wasting food, or dealing with theft.

3. Gross Profit

This is your revenue minus COGS.

Gross Profit = Revenue – COGS

This tells you how much money you have left after covering the food and drinks. It doesn’t include wages, rent, or other overheads yet.

For example:

• Sales: $100,000
• COGS: $30,000
• Gross Profit: $70,000 (or 70%)

A solid gross profit margin for a restaurant is 65–75%.

4. Operating Expenses

Now here’s where the money starts flying out the window. Operating expenses include:

a) Labour Costs

This is your next biggest expense after food. It includes:

• Wages (front and back of house)
• Superannuation
• Payroll tax
• WorkCover
• Staff meals and uniforms

In Australia, your total labour cost should ideally be below 35% of your sales.

b) Rent and Utilities

• Lease payments
• Water, electricity, and gas
• Internet and phone

High rent can cripple a restaurant, especially in metro areas like Sydney or Melbourne.

c) Operating Supplies

• Cleaning products
• Menus
• POS system subscription
• Napkins, straws, utensils

d) Marketing and Advertising

• Facebook/Instagram ads
• Website and SEO
• Flyers, loyalty cards, and signage

e) Repairs and Maintenance

• Kitchen equipment servicing
• Plumbing or electrical issues
• Furniture repairs

f) Insurance and Licences

• Public liability insurance
• Food business licences
• Liquor licence (if applicable)

📌 Tip: Keep a close eye on recurring expenses like software subscriptions and utilities: they add up fast.

5. Net Profit (or Loss)

Now for the big reveal. This is what you’ve got left after all expenses are deducted:

Net Profit = Gross Profit – Operating Expenses

If this number is positive, congratulations—you’re making money. If it’s negative, you’re either reinvesting or, let’s be honest, losing cash.

A healthy restaurant's net profit margin is usually between 5 and 15%. If you’re above 15%, you’re doing bloody well. Less than 5%? You need to take a hard look at your pricing, portion sizes, wastage, and staffing.

A Simple Example

Let’s say this is your monthly P&L:

Net Profit Margin = 20%

Not bad at all!

How Often Should You Review It?

• Weekly: For a quick overview. Helps you stay agile.
• Monthly: For tracking trends and planning.
• Quarterly: For strategic decisions or chatting with investors or banks.

The more frequently you check it, the more control you have.

Common Mistakes to Avoid

• Lumping everything together: Break down categories properly to get insights.
• Not including wastage: That affects your actual profit margins.
• Overlooking small recurring fees: Software, delivery commissions, and merchant fees matter.
• Ignoring seasonal trends: Your P&L in summer may look very different to winter.

How POS Systems Help

A good Restaurant POS system (like POSApt, if you’re using one) makes this all 10x easier by:

• Automatically tracking sales and COGS
• Exporting reports with one click
• Linking inventory to menu items
• Giving real-time insights into bestsellers
• Helping with staff scheduling and wage control

If you’re doing your P&L manually in Excel, it’s time for an upgrade.

Final Thoughts

A restaurant P&L isn’t just a report you send off to your accountant—it’s your blueprint for survival and growth.

Once you know how to read it, you’ll make smarter decisions like:

• “Should we cut back Sunday shifts?”
• “Can we afford a kitchen reno?”
• “Why is our food cost suddenly up 5% this month?”

And you’ll stop guessing—and start managing with confidence.

Because in the end, running a restaurant is part passion, part hustle, and a whole lot of keeping an eye on the numbers.

If you’d like a custom P&L template or help setting up reports from your POS system, give us a shout. We’re happy to help Aussie restaurant owners get on top of their finances without the jargon.