The profit and loss statement (P&L) is the financial report that shows all of a restaurant's income and expenses for a period, revealing whether the business is making an operating profit or a loss.
The profit and loss statement (P&L, also called the income statement; in Spain, the cuenta de explotación or PyG) is the fundamental financial document that summarises all of a restaurant's income and expenses over a given period (monthly, quarterly or annually), showing the bottom line: profit or loss. Unlike the balance sheet (which shows the financial position at a given moment), the P&L reflects the flow of activity: how much was taken, how much was spent and what is left. In restaurants, the P&L is typically structured in four big blocks of expenses that are subtracted successively from revenue: first, cost of sales (food cost + beverage cost), which gives gross margin; second, staff costs (labour cost), which together with cost of sales make up prime cost; third, operating expenses (rent, utilities, marketing, maintenance, insurance, professional services), which gives EBITDA or gross operating profit; and fourth, depreciation, interest and taxes, which finally give net profit. A well-structured P&L shows not only absolute figures but also each line as a percentage of sales, so you can compare with industry benchmarks and spot variances.
Reference percentages for a well-run casual restaurant in Spain are: food cost 28–32%, beverage cost 18–24%, labour cost 28–32%, occupancy cost 8–12%, other operating expenses 8–12%, EBITDA 10–18% and net profit 5–10%. These benchmarks vary by type of venue: fast food has a lower labour cost but a similar food cost; a gastronomic restaurant has higher food and labour costs but also a higher average spend that makes up for it. The P&L is the main tool for management decisions: if food cost is above target, review your recipe costings, suppliers or prices; if labour cost shoots up, optimise the rota; if EBITDA falls, identify which lines have grown more than they should. Reviewing the P&L every month (not just at year end) is what separates a professional manager from an owner flying blind.
Net profit = Revenue – Cost of sales – Staff costs – Operating expenses – Depreciation – Interest – Taxes
The P&L is built as a cascade, subtracting successive expense lines from revenue. Typical structure: 1) Total sales (100%). 2) – Cost of sales (food cost + beverage cost) = Gross margin (typically 65–72%). 3) – Staff costs (labour cost) = Operating margin before fixed costs (typically 35–42%).
4) – Occupancy costs (rent, property tax, buildings insurance). 5) – Utilities (electricity, water, gas). 6) – Marketing and advertising. 7) – Maintenance and repairs.
8) – Professional services (accountant, advisers). 9) – Other operating expenses = EBITDA (typically 10–18%). 10) – Depreciation (equipment, refurbishment). 11) – Interest = Profit before tax.
12) – Corporation tax (25% standard rate in Spain) = Net profit (typically 5–10%). Each line is shown both as an absolute figure and as a percentage of total sales. This structure lets you quickly see which areas are out of control: if food cost grows by two points from one month to the next, there is a cost or pricing problem to investigate. The sum of all expense lines must equal the difference between revenue and net profit, which serves as a check that no expense is missing.
Your restaurant took €48,000 (excluding VAT) in March. You build the P&L: Sales: €48,000 (100%). Food cost: €13,440 (28%). Beverage cost: €2,880 (6%).
Total cost of sales: €16,320 (34%). Gross margin: €31,680 (66%). Staff costs: €14,880 (31%). Margin after staff: €16,800 (35%).
Rent and occupancy: €4,320 (9%). Utilities: €1,920 (4%). Marketing: €720 (1.5%). Maintenance: €480 (1%).
Accountant and services: €360 (0.75%). Other expenses: €600 (1.25%). Total operating expenses: €8,400 (17.5%). EBITDA: €8,400 (17.5%).
Depreciation: €1,200 (2.5%). Interest: €480 (1%). Profit before tax: €6,720 (14%). Estimated corporation tax: €1,680 (3.5%).
Net profit: €5,040 (10.5%). Analysis: a 28% food cost is fine, a 31% labour cost is at the high end (check whether the rota is optimised), a 17.5% EBITDA is excellent and a 10.5% net profit indicates a very profitable restaurant. You compare with February: labour cost was 29%, so it has risen 2 points (€960 more). You investigate and find you took on an extra weekend worker who wasn't needed.
The P&L is your restaurant's financial map: without it, you are managing blind. Many owners only look at the till at the end of the day or the bank balance at the end of the month, but these figures don't tell the whole story. You can have a full till because you haven't paid suppliers, or a low balance because you invested in equipment. The P&L shows the operating reality: is the business generating more money than it spends on its ordinary activity? The percentage structure also makes comparison possible: if your food cost is 35% and the industry benchmark is 30%, you know you have a problem even without knowing the absolute numbers.
That comparability works between months (spotting trends), between sites in a chain (identifying the most efficient) and against industry data (knowing whether you are above or below average). The P&L is also the document banks, investors and potential buyers ask for when assessing a restaurant: a business with tidy monthly P&Ls and good ratios comes across as professional and is worth more than one that only has "whatever the accountant does" at year end. Finally, the discipline of preparing and reviewing the P&L every month builds a management culture in the team: when everyone knows the previous month's numbers are reviewed on the 5th, day-to-day decisions are made with their impact on those metrics in mind. The P&L isn't just a report; it is the tool that turns a restaurant owner into a business manager.
Zindra automatically generates your monthly P&L by bringing together sales, purchasing, payroll and expense data. The report includes each line as a percentage of sales, a comparison with the previous month and with industry benchmarks, and alerts when any line moves away from target.
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Food cost is the percentage of a dish's selling price that goes on the cost of its ingredients. It is the single most important indicator of how profitable your menu is.
Prime cost (coste primo in Spanish) is food cost plus staff cost. It is the most complete measure of a restaurant's direct operating cost and should stay between 55% and 65% of turnover.
Cash flow in a restaurant is the movement of money in and out of the business. Managing cash well is vital for the restaurant's survival, even if it is profitable on paper.
Labour cost is the percentage of turnover that goes on staff. In restaurants, a healthy benchmark ranges from 25% to 35% depending on the type of venue.
The break-even point is the level of sales at which a restaurant covers exactly all its costs (fixed and variable), making neither a profit nor a loss. It is the minimum turnover needed to survive.
KPIs (Key Performance Indicators) are the key metrics that measure a restaurant's performance in its critical areas: sales, costs, productivity, guest satisfaction and profitability.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) measures a restaurant's operating profit before interest, tax, depreciation and amortisation. It is the most widely used indicator for judging a business's real profitability.
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