How to Read a Restaurant Profit and Loss Statement in the UK

A strong understanding of your numbers can make all the difference when margins are tight — and in today’s UK restaurant climate, that’s most of the time.

A restaurant profit and loss (P&L) statement helps you see where your business stands financially and where you might improve. Whether you’re a seasoned general manager or a budding restaurateur opening your first café, this guide will show you how to read and use a P&L to drive better decisions.

What is a Restaurant Profit and Loss Statement?

A P&L, or income statement, lays out your restaurant’s total revenue and expenses over a given time period — usually monthly, quarterly, or annually. It shows where your income comes from and where it’s going, helping you understand net profit or loss at a glance.

Your P&L helps you:

• Track overall profitability

• Monitor costs like labour and food

• Identify underperforming areas

Why Your P&L Matters More Than Ever in the UK

With 78% of UK consumers saying dining out has become too expensive to do regularly, understanding and controlling your costs is mission-critical.

According to the Toast Voice of the Restaurant Industry UK, top challenges for UK operators include:

• Managing business finances

• Increasing profitability

• Improving employee productivity

A clear P&L gives you a bird’s-eye view to tackle all three.

How to Create a Restaurant Profit and Loss Statement

1. Choose Your Reporting Period

Start by selecting a timeframe — monthly P&Ls are common, but weekly or quarterly can also work. Consistent reporting gives you better historical insights and helps you spot seasonal trends.

2. Record Sales

Break down your revenue into:

• Food

• Alcohol (include draught, spirits, and wine)

• Non-alcoholic drinks

Using a POS system like Toast lets you pull detailed sales reports automatically.

3. Enter Cost of Goods Sold (COGS)

This refers to the cost of ingredients and stock used to produce menu items during the period.

Formula: COGS = (Opening Inventory + Purchases) – Closing Inventory

For accurate tracking, try recipe costing tools to assess plate-by-plate profitability.

4. Add Labour Costs

Include:

• Wages and salaries

• National Insurance contributions

• Staff benefits and holiday pay

Labour and food are your biggest variable costs — together known as your prime cost, a vital metric for UK restaurateurs.

5. Operating Expenses

Capture your controllable day-to-day costs such as:

• Utilities

• Repairs

• Music licensing

• Marketing spend

• Uniforms and supplies

According to the Toast Consumer Preferences Survey 2025, in which 200 UK diners were surveyed about restaurant pricing and value, 44.5% of UK diners say rent and utilities are the biggest pricing challenge for restaurants.

6. Occupancy Costs

This includes:

• Rent

• Business rates

• Property insurance

While harder to change, some operators renegotiate lease terms or refinance to ease the burden.

7. Depreciation

Factor in the gradual loss in value of assets such as your ovens, fridges, and furniture over time. Your accountant can help you handle this.

Understanding Your Gross Profit and Net Profit

• Gross Profit = Total Sales – COGS

• Net Profit = Total Income – (COGS + Labour + Operating Expenses + Occupancy + Depreciation)

Here's something interesting: nearly 60% of UK customers say they'd be more understanding about restaurant prices if they actually knew what goes into running a place. 

Maybe it's time to consider being a bit more open — a simple breakdown on your website or even a small note on your menu could help customers see why that burger costs what it does.

The Bottom Line

Your P&L isn't just something to hand over to your accountant once a year. It's actually a very useful resource for making smart decisions. Thinking about changing your menu? Check your P&L. Wondering if you can afford another team member? The numbers will tell you. Considering that new POS system? Your income statement has the answer.

And with more than half of UK diners saying price changes have affected where they eat, understanding your margins isn't just helpful, it's essential for staying competitive.