The Restaurant P&L, Line by Line (For Owner-Operators)
By Marji · Published · Updated · 6 min read
A restaurant P&L runs sales, then cost of goods sold, then labor (the two together are prime cost), then the other controllable expenses, then occupancy, interest and depreciation, ending in income before taxes. Read every line as a share of sales and against the same period last year. For scale, the National Restaurant Association's 2025 data abstract put 2024 median income before taxes at 2.8% of sales for full-service restaurants and 4.0% for limited-service.
Percentages make months, years and restaurants of different sizes comparable; dollars tell you what is at stake. Keep both on the page, and compare each line first with your own history, which is the benchmark built on your menu, rent and staffing. The line order below is modelled on the Association's Uniform System of Accounts for Restaurants, which puts prime cost straight after labor and occupancy after the expenses management controls day to day; this version adds a gross profit line and carries depreciation below the line with owner pay and interest.
A full P&L, worked
| Line | Amount | % |
|---|---|---|
| Food sales | $168,000 | 80.8% |
| Beverage sales | $40,000 | 19.2% |
| Total sales | $208,000 | 100% |
| Food cost of goods sold (share of food sales) | $52,080 | 31.0% |
| Beverage cost of goods sold (share of beverage sales) | $9,200 | 23.0% |
| Total cost of goods sold | $61,280 | 29.5% |
| Gross profit | $146,720 | 70.5% |
| Hourly wages | $48,900 | 23.5% |
| Salaries | $16,000 | 7.7% |
| Payroll tax, workers' comp, benefits | $11,700 | 5.6% |
| Total labor | $76,600 | 36.8% |
| Prime cost | $137,880 | 66.3% |
| Utilities | $5,400 | 2.6% |
| Marketing | $3,100 | 1.5% |
| Repairs & maintenance | $2,600 | 1.3% |
| Supplies & smallwares | $3,300 | 1.6% |
| Credit card fees | $5,700 | 2.7% |
| Admin, accounting, software | $2,900 | 1.4% |
| Other controllable expenses | $23,000 | 11.1% |
| Rent | $13,500 | 6.5% |
| Property taxes and property insurance | $2,100 | 1.0% |
| Occupancy | $15,600 | 7.5% |
| Profit before owner pay, interest, depreciation and tax | $31,520 | 15.2% |
Worked example · Below the line, same hypothetical month
- Profit before owner pay, interest, depreciation and tax
- $31,520
- Owner's salary ($90,000 a year)
- −$7,500
- Loan interest
- −$1,100
- Depreciation of equipment and build-out
- −$2,000
- Income before income tax
- $20,920 · 10.1%
The loan payment is $4,200 a month, but only its $1,100 of interest is an expense; the $3,100 of principal leaves the bank account without touching the P&L. Cash left after the owner's pay and the full loan payment is $31,520 − $7,500 − $4,200 = $19,820. This is a strong month: the national median for full-service restaurants was 2.8% of sales in 2024.
The tax rules point the same way. On a loan payment, "you can deduct only the interest" (IRS Publication 535, 2022, the last edition). A sole proprietor "can't deduct your own salary or any personal withdrawals you make from your business" (IRS Publication 334), while an S corporation must pay a shareholder who works in the business reasonable compensation as wages before it pays them any distributions. Whatever your tax return shows, charge a market-rate salary for the owner's work on the management P&L, or it overstates what the business earns.
Reading it top to bottom
Sales
Split food and beverage, always, and keep off-premise sales on their own line: once an app commission is involved, those sales have a different cost structure. For scale, the Census Bureau's 2022 Economic Census found alcoholic drinks were 16.0% of full-service restaurant revenue nationally, and 20% at the restaurants that sell them. Watch your own beverage share over time; a falling share with steady covers means fewer drinks per guest.
Cost of goods sold
From inventory, not from purchases: opening inventory plus purchases minus closing inventory, for food and for beverage separately, because a blended number hides both problems. The food cost formula guide works a month through, and the inventory count guide covers the count. See COGS.
Labor
Fully loaded. In this example, payroll taxes, workers' comp and benefits add $11,700 — 18% of wages and 5.6 points of sales — so wages alone would understate labor by more than five points. The Association's 2024 median for salaries and wages including benefits was 36.5% of sales for full-service restaurants and 31.7% for limited-service. The labor cost guide shows what to include. Split hourly from salaried: one moves with volume, the other does not.
Prime cost
Cost of goods sold plus total labor, as its own subtotal; add it if your statement does not show one. It is the line you can manage weekly. The Uniform System of Accounts for Restaurants (8th edition, 2012, p. 107) says prime cost "typically consumes 60 percent to 65 percent of every restaurant sales dollar", and the Association's one published survey median is for limited-service restaurants: 65 cents of every sales dollar in 2024. Neither is a target; prime cost explained shows how to derive your own ceiling.
Other controllable expenses
Utilities, marketing, repairs, supplies, card fees and administration: the costs management can change month to month. No public national median exists for these lines, so read each against your own history. Card fees deserve a look of their own: on Visa's April 2026 schedule, interchange alone on a restaurant credit card presented in person is 2.10% or 2.60% of the transaction depending on the card, and the rate you pay adds the processor's charges on top.
Occupancy
Rent, property taxes and property insurance: largely fixed, and decided when you signed the lease. As a share of sales it falls in good months and rises in slow ones. The Association's 2024 medians were 5.7% of sales for full-service restaurants and 5.2% for limited-service (6.0% for full-service restaurants in urban areas), counting those three costs and not utilities; this example's 7.5% is above them. Group the lines the same way before you compare.
Four lines to watch between statements
- Food cost as a percentage, week over week. It moves with supplier prices, which can change every delivery, so it is the first line to check when an invoice moves.
- Labor against covers as well as sales. A price increase improves labor percentage without anything in the schedule changing; labor dollars per cover does not move with price.
- Beverage cost. A rising pour cost points at prices, pours or control — the pour cost guide shows how to tell which.
- Card fees as a percentage. They should be stable. A rise means a processor change, a shift in card types, or more of your sales paid by card; check the processor statement.
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 Fridays and Saturdays, so two months are not like for like; four-week periods are.
What net profit should a restaurant make?
There is no standard. In the National Restaurant Association's 2025 data abstract, 2024 median income before taxes was 2.8% of sales for full-service restaurants and 4.0% for limited-service; among full-service restaurants it was 1.1% for those with sales under $2 million and 4.3% at $2 million or more. These are medians, so half did worse, and the survey does not say whether owner pay was deducted first. The Association says its data is "not intended to represent standards or goals for individual restaurants." Set your own target from your debt, the owner pay the business must cover and the return you need on the money invested.
Where does third-party delivery commission go?
In operating expenses, not cost of goods sold: the Association's survey counts third-party delivery fees under general and administrative expenses. Better still, give it its own line so you can see what the channel 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?
Check accrual versus cash timing, inventory adjustments at close, and how owner pay and depreciation are booked. Neither version is wrong; know which one you're reading before you compare two months.
The cost side, weekly.
What ingredient prices did, what it does to a typical dish, and one thing worth repricing. One email, Monday, no pitch.
Terms this guide uses
Prime cost
Total cost of goods sold plus total labor cost — the two numbers that decide whether a restaurant survives.
COGS (cost of goods sold)
The cost of the food and beverage actually consumed in a period, computed from inventory rather than from purchases.
Fixed vs. variable cost
Fixed costs don't move with sales; variable costs do. Most restaurant labour is neither, and that's where planning goes wrong.
Covers
The number of guests served in a period — the denominator behind average check, labour per cover and cost per cover.
Read next
Prime Cost Explained
What prime cost includes, how to calculate it weekly, where the 65% rule of thumb comes from, and how to derive the ceiling your own P&L allows.
My Restaurant Isn't Making Money. Where Do I Look?
A structured walk down the restaurant P&L to find where the profit is going: profit versus cash, the line that is out of range, and each fix sized in monthly dollars before you pull it.
What's a Good Food Cost Percentage? National Medians and the Target Your P&L Can Afford
What national data says about restaurant food cost percentage — 2024 medians of 32.0% full service and 32.4% limited service — why formats differ, and how to set the target your P&L can afford.