How to Read a Restaurant Profit and Loss Statement in Canada

Understanding your restaurant’s profit and loss (P&L) statement isn’t just accounting — it’s essential to making smart decisions that keep your business financially healthy and future-ready. Whether you run a casual dining spot or manage multiple quick-service locations, your income statement gives you the clearest picture of what’s working and what’s draining your resources.

In today’s economic climate, where, according to the Toast Consumer Preferences Survey 2025, 69.5% of Canadians say rising prices have changed their dining habits, knowing where every dollar is going is more critical than ever.

What Is a Restaurant P&L Statement?

Your restaurant’s P&L, or income statement, shows your total revenue and expenses over a defined time period — usually monthly or yearly. It highlights:

• Where your sales are coming from (food, alcohol, soft drinks)

• How much you’re spending on inventory, staffing, and operations

• Your gross and net profits — i.e., what’s left after covering all costs

According to Toast’s Voice of the Canadian Restaurant Industry report, 1 in 3 operators are focused on improving profitability this year, and a robust P&L is the first tool in that toolbox.

Step-by-Step: How to Create a Restaurant P&L Statement

1. Choose Your Timeframe

You can generate your P&L weekly, monthly, or quarterly depending on your reporting needs. Monthly reviews help spot seasonal trends and catch inefficiencies early.

2. Record Sales

Use your POS system to break down sales into categories like:

• Food

• Alcohol

• Non-alcoholic drinks

Pro tip: Segment food sales by menu category (e.g. mains, snacks, desserts) for sharper insight.

3. Enter Cost of Goods Sold (COGS)

This includes the cost of ingredients and items used to prepare your menu. Use recipe costing to track this accurately.

COGS formula: Beginning Inventory + Purchases – Ending Inventory = COGS

According to the Toast Consumer Preferences Survey 2025, in which 200 Canadian diners were surveyed about restaurant pricing and value, 46.5% believe food costs are the biggest challenge for restaurants, and 78% say they notice price changes — transparency in pricing starts here.

Key Sections of a Canadian P&L

Labour

Include wages, benefits, and payroll taxes. Toast’s Canadian restaurant report shows labour makes up around 20% of sales for many operators, equal to or exceeding tech investment.

Operating Costs

Covers cleaning supplies, maintenance, marketing, and other daily overheads.

Occupancy Costs

This includes rent, utilities, and property insurance. According to the Voice of the Canadian Restaurant Industry report 10% of the average budget goes toward occupancy.

Depreciation

Track the value reduction of assets like kitchen equipment and furniture.

Interpreting the Results

Prime Costs

These are your labour + COGS, and they should ideally sit at 60-65% of total sales. 

Gross Profit Margin

This shows how much money is left after subtracting COGS from sales. A strong gross margin means you’re pricing dishes well and managing waste effectively.

Net Profit

The bottom line — subtract all your costs (labour, occupancy, operating) from total revenue. If it’s consistently negative, it’s time to revisit staffing, sourcing, or pricing strategy.

Why Transparency Pays Off in Canada

According to research in the Toast Consumer Preferences Survey 2025, Canadian diners want to understand what they’re paying for:

• 59% prefer restaurants that show sourcing or price breakdowns

• 28.5% would be more understanding of pricing if they knew a restaurant’s break-even point

• Only 16% of Canadians have ever seen a restaurant’s P&L

Use this opportunity to stand out. Consider adding a short note on your menu or website about how pricing supports fair wages, sustainable sourcing, and reducing food waste.

Final Thoughts

For Canadian restaurateurs facing rising food costs, tight labour markets, and cautious consumers, a clear and consistent profit and loss statement is more than a document — it’s your financial compass. It tells you where you’re thriving, where you’re leaking cash, and what actions to take next.

As 89% of Canadian restaurant operators plan for growth this year, having a strong financial foundation will help you scale confidently, serve your guests better, and invest in the future of your business.