A surprising number of hospitality operators run their venue successfully without genuinely understanding their own profit and loss statement. Here is how to actually read one properly.
Start With Revenue and Understand the Composition
Understand how revenue breaks down between food and beverage and between different revenue streams if you run functions or catering alongside regular trade.
Understand the Difference Between Cost of Goods and Operating Expenses
Cost of goods moves roughly in proportion to revenue. Operating expenses, particularly rent, are largely fixed regardless of how busy you are.
Food Cost Percentage Tells You Half the Story
A low food cost percentage achieved by cutting portion sizes might look good on paper while damaging your customer experience. Our food cost consulting service covers how to manage this properly.
Labour Cost Needs to Be Viewed Across the Full Period
Labour cost percentage can look misleadingly high or low depending on the specific period, particularly around public holidays. Look at trends over several months.
Understand Your Break-Even Point
Knowing this number tells you how much buffer you have on a quiet week and how much additional revenue translates directly into profit.
Look at Trends, Not Just Single Periods
Comparing several months tells you whether your business is genuinely improving, declining, or holding steady.
If you want help understanding your numbers and finding the real opportunities for improvement, talk to Pestle and Mortar.