Neal Lefebvre
Accounting and payroll, Blog

Managing any business requires some number crunching, but when it comes to tracking profits, few businesses are as complex as restaurants. Restaurant owners need to track a plethora of different revenues and costs, from food cost percentage to payroll to rent and more. When you factor in multiple stores, just keeping track of everything can be daunting. And “just keeping track” doesn’t really cut it when you could be putting these numbers to work to improve your business.

When it comes to keeping track of the various revenues and costs of restaurants, there are a few different options. Some owners track their numbers on a spreadsheet – often referred to as a “Profit and Loss Statement,” or “P&L.” Other restaurant owners may utilize software to manage data from their stores, and that software should be able to create P&L statements on its own. Regardless of which of these cases applies to you, here are some of the key considerations that make tracking profit and loss a bit more complex for restaurants.

Download our free Profit & Loss Template.

Tracking profits

The first section of a profit and loss template is the fun part – profits. This is where you put together a birds-eye view of the various revenues your stores are bringing in, as well as a combined income and profit total. This section should be granular enough to list out each store (or other revenue stream) individually, but should also present a big-picture snapshot of your total income.

Feel free to break this section down a level further. If your restaurants just started serving breakfast, have a line item for each restaurant listing sales during breakfast and non-breakfast hours. If your restaurant has a split menu – like a bakery and a restaurant, or a pizza section and a fried chicken section – list each segment separately. If you sell alcohol, call that out separately, as well.

Tracking losses

Tracking losses may not be as fun as tracking profits, but it’s no less important. This is where you list out the cost of labor, operating, and goods sold. Get into detail here – it’s often helpful to see your costs laid out in this format.

For labor costs, break things down in whatever way makes the most sense for your restaurants. It’s often helpful to separate labor into cash register attendees, kitchen staff, and managers. Alternatively, it might make more sense to break labor costs into breakfast, lunch, and dinner shifts. You could even list both sets, as long as you make sure to indicate that they add up to the same total labor cost. (This is one area where it can be helpful to have software that makes these distinctions for you.)

Operating costs are a good way to call out expenses you have little control over. List everything involved in keeping your stores running: rent, insurance, taxes, even marketing. An overview of your (relatively) stable costs helps manage expectations.

The cost of goods sold may be the most important part of this section because inventory makes up such a large part of your costs. Call out your food and beverage costs, separating alcohol if you sell it. If your store caters, include a line item for catering costs. If you sell merchandise, list that too.

Don’t do nothing

This is the most important factor when it comes to tracking profit and loss. Don’t make the mistake of assuming you don’t need to explicitly track P&L – individual store data doesn’t paint a complete picture. You need a holistic view of the health status of your restaurants, and the best way to accomplish that is by putting your data together so you can track profits and losses in a single place.

Here’s some good news: your values don’t have to be perfect to the decimal, and you’re not going to get audited if you forget something. The purpose of a Profit and Loss Statement isn’t to give you another report to fill out every month. The P&L is a tool to help you see how your stores are doing, both individually and collectively, so you can make better decisions about your business.

Whether you’re tracking profits and losses directly or using software to do the heavy lifting for you, the important thing is that you have a strong sense of the ups and downs and wellbeing of your restaurants at any given time. Download our profit and loss template to help make sure you’re getting the information you need:

Download our free Profit & Loss Template.

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