The Restaurant P&L, Line by Line (For Owner-Operators)

August 10, 2026 · 4 min read

A restaurant P&L runs sales, then cost of goods sold, then labour, then operating expenses, then occupancy, ending in net profit. Every line is read as a percentage of total sales. For a healthy independent, prime cost lands near 65%, occupancy under 10%, and net profit between 3% and 8%.

The reason to read a P&L in percentages rather than dollars is that percentages are comparable — across months, across years, and against the only benchmark that matters, which is your own previous quarter.

A full P&L, worked

One month, single-unit full-service restaurant
Line	Amount	% of sales	Healthy range
Food sales	$168,000	80.8%	—
Beverage sales	$40,000	19.2%	20–30%
Total sales	$208,000	100%	—
Food COGS	$52,080	31.0%	28–35%
Beverage COGS	$9,200	23.0%	18–28%
Total COGS	$61,280	29.5%	26–33%
Gross profit	$146,720	70.5%	67–74%
Hourly wages	$48,900	23.5%	—
Salaries	$16,000	7.7%	—
Payroll tax, comp, benefits	$11,700	5.6%	—
Total labour	$76,600	36.8%	30–38%
Prime cost	$137,880	66.3%	≤65%
Rent	$13,500	6.5%	6–10%
Utilities	$5,400	2.6%	2–4%
Insurance	$2,100	1.0%	0.8–2%
Occupancy	$21,000	10.1%	≤10%
Marketing	$3,100	1.5%	1–3%
Repairs & maintenance	$2,600	1.3%	1–2%
Supplies & smallwares	$3,300	1.6%	1–2%
Credit card fees	$5,700	2.7%	2.5–3.5%
Admin, accounting, software	$2,900	1.4%	1–2%
Operating expenses	$17,600	8.5%	7–11%
Net profit	$31,520	15.2%	3–8%

Reading it top to bottom

Sales

Split food and beverage always. Beverage should be 20–30% of total sales in a full-service restaurant; consistently below that usually means the drinks programme is under-sold rather than under-priced. Track off-premise separately too — it has a completely different cost structure once commission is involved.

Cost of goods sold

From inventory, not from purchases: opening plus purchases minus closing. Beverage COGS goes on its own line because a blended food-and-beverage number hides both problems. See COGS.

Labour

Fully loaded. Gross wages divided by sales understates labour by four to six points, which is precisely enough to make a problem invisible — the labor cost calculator adds the taxes, comp and benefits if all you have to hand is a payroll total. Split hourly from salaried — one is semi-variable, the other is fixed, and they behave completely differently in a slow month.

Prime cost

Put it on the P&L as its own subtotal even though no accountant will do it for you. It is the line you manage weekly, and having it in front of you monthly keeps the two halves honest. The full explanation is here.

Occupancy

Largely fixed and largely decided years ago when you signed the lease. Above about 10% of sales, occupancy starts constraining every other decision on the page — it's the line that determines how much room you have for everything else.

The four lines where problems show up first

Food COGS as a percentage, week over week. Rises before anything else does, because supplier prices move faster than any other input.
Labour as a percentage, against covers rather than sales. Labour percentage improves when you raise prices without anything actually improving — labour dollars per cover doesn't lie like that.
Beverage COGS. A rising pour cost is one of the earliest and clearest signals of a control problem, because bar inventory is easy to count and hard to fake.
Credit card fees as a percentage. Should be stable. A rise usually means your processor changed something, or your mix shifted toward a more expensive card type.

Getting a P&L you can actually use

Monthly, within ten days of close. A P&L that arrives six weeks late is history, not management.
Same categories every month. A line that moves between categories destroys the comparison, which is the whole value.
Percentages next to dollars, always, or you'll misread every growth month.
Thirteen four-week periods rather than twelve calendar months, if you can. Calendar months have different numbers of weekends, and weekends are most of the sales.

What net profit should a restaurant make?

For an independent full-service restaurant, 3–8% after owner compensation is a normal healthy range. Quick service can run higher. Anything above about 12% after paying the owner properly is unusual and worth understanding.

Where does third-party delivery commission go?

In operating expenses, not COGS — it's a channel cost, not a cost of goods. Better still, track it on its own line so you can see what the channel actually costs you.

Should I include my own salary?

Yes, at market rate for the job you're doing. A P&L that looks profitable only because the owner works for free isn't telling you whether the business works — it's telling you the owner is subsidising it.

Why is my accountant's P&L different from mine?

Usually accrual vs. cash timing, or inventory adjustments they make at close that you don't. Neither is wrong; make sure you know which one you're reading before you compare two months.

The cost side, weekly.

What wholesale food prices did, what it does to a typical dish, and one thing worth repricing. One email, Monday, no pitch.