This guide walks through what goes into a restaurant P&L, how to read it, what benchmarks to compare it against, and what to do when the numbers need improving.
What is a profit and loss statement for a restaurant?
A restaurant profit and loss statement, or P&L, shows how much money your restaurant made and spent over a set period. It lists total revenue, subtracts every cost of running the business, and shows what's left as profit or loss.
A P&L is not the same as a bank statement or a cash flow report. Cash flow tracks money moving in and out of your account day to day. Your P&L shows operational performance, whether the business itself is profitable, regardless of when cash actually changes hands.
Most restaurants run their P&L monthly. This is often enough to catch a cost problem before it compounds into a bigger one.
Why your P&L deserves more than a once-a-month glance
Reviewing your P&L once a month is a solid starting habit, but cost problems can compound faster than a monthly check-in catches.
A food cost percentage that drifts one or two points above target barely registers week to week. Over a full quarter, that same drift can erode thousands of dollars in profit before anyone notices.
This is the gap between a restaurant that looks busy and one that's actually profitable. Sales can climb while margins quietly shrink underneath them. Reviewing your P&L on a weekly basis, or monthly at a minimum, is the only way to catch the difference between healthy revenue and real financial health.
What's inside a restaurant profit and loss statement?
A restaurant P&L breaks down into five core sections: revenue, cost of goods sold, labour costs, operating costs, and net profit or loss. Here's what belongs in each one.
Revenue and sales
This section covers every revenue stream your restaurant generates: food sales, beverage sales, catering, delivery sales, and any other income. Total revenue is the sum of all these streams before any costs come out.
Delivery sales, including orders through DoorDash Marketplace, should appear here as their own line rather than blended into general food sales. Tracking delivery revenue separately is what makes channel-level analysis possible later in this guide, and it's usually what reveals that delivery is contributing more to the bottom line than it looks like at a glance, since much of the kitchen and staff cost behind it is already accounted for elsewhere on the P&L.
One quick clarification: sales tax collected from customers isn't restaurant revenue. It passes through to the tax authority, so it shouldn't be counted as part of your total revenue or your bottom line.
How much you collect depends on where you operate. GST or HST applies to restaurant meals everywhere in Canada. On top of that, Manitoba's RST and Saskatchewan's PST apply to prepared food, while British Columbia exempts food for human consumption, including restaurant meals, from PST and still taxes alcohol. In Quebec, QST is administered by Revenu Québec rather than the CRA. Ontario applies HST at 13%, but the province provides a point-of-sale rebate of the 8% provincial portion on qualifying prepared food and beverages when the pre-tax total is $4 or less, so you collect only the 5% federal portion on those items. That threshold applies to the combined total of qualifying items in a single sale rather than to each item, and alcohol never qualifies.
Confirm the treatment for your province before you set up your POS tax rules. Getting it wrong shows up on your P&L as revenue you don't actually have.
Two small improvements can move this revenue line meaningfully: menu descriptions written in your own words rather than generic item names, and photo coverage across your full menu instead of a handful of items. Both are among the cheapest levers available on this line.
For more on how costs stack up against this revenue line, see the DoorDash guide on restaurant costs.
Cost of goods sold (COGS)
Cost of goods sold, or COGS, represents the direct cost of every food and beverage item sold during the period. That includes ingredients, produce, proteins, alcohol, and packaging.
Calculating it is straightforward: starting inventory, plus purchases made during the period, minus ending inventory, equals COGS. Subtracting COGS from total revenue gives you gross profit; the amount left over before labour and other operating costs come out. Dividing gross profit by revenue gives you your gross profit margin.
Food cost percentage, COGS as a share of revenue, is one of the most closely watched numbers in restaurant accounting. Across Canadian food services it's also the single largest cost line, ahead of wages, so even small shifts are worth tracking closely. The benchmarks section below has the sector figures.
Labour costs
Labour costs cover every expense tied to your team: hourly wages, salaried pay, employer payroll contributions, employee benefits, and any contract labour. For most restaurants, labour is the largest or second-largest cost line on the P&L, and it can drift even when other costs stay flat.
In Canada the employer contribution side is more than a single line. It includes CPP or QPP contributions, EI premiums, provincial workers' compensation premiums, and an employer health tax in some provinces. Vacation pay and statutory holiday pay are legal entitlements rather than discretionary costs, so accrue them here instead of absorbing them as a surprise in the period they're paid out.
This is where prime cost comes in: prime cost equals COGS plus labour costs. Many restaurant operators work to a target of 60-65% of revenue, leaving enough margin to cover the rest of your operating costs and still turn a profit, though the right range depends on your concept and market.
Operating and occupancy costs
Occupancy costs include rent, property taxes, property insurance, and common area maintenance.
Operating costs cover everything else: utilities, insurance, marketing, repairs, credit card processing fees, your point-of-sale (POS) system fees, delivery platform fees, and music licences from SOCAN and Re:Sound if you play music in your dining room. Depreciation on kitchen equipment and buildout also lives here, which is the book figure; Capital Cost Allowance is its counterpart on your tax return.
Delivery platform commissions, the fees paid on Marketplace orders, belong in this section as a cost of sales. This is exactly why separating delivery revenue (in the revenue section above) from delivery fees (here) matters: it's the only way to see whether a channel is actually contributing to your bottom line.
Net profit or loss
Net profit, or net loss, is what's left after subtracting every cost and expense from total revenue. Some operators also refer to this figure as net income.
Restaurants run on thin margins by nature. Statistics Canada put the operating profit margin for Canadian food services and drinking places at 4.1% in 2024, and net profit sits below that once interest and taxes come out.
A low net profit percentage isn't automatically a red flag. What matters more is whether it's improving over time, and whether it lines up with benchmarks for restaurants of your format.
Restaurant P&L benchmarks: what do "good" numbers actually look like?
Benchmarks are the industry targets that healthy independent restaurants typically fall within. The most useful Canadian reference point is Statistics Canada's annual data on food services and drinking places, which reports where the money actually goes across the sector.
In 2024, cost of goods sold was the single largest operating expense for Canadian food services and drinking places, at 35.9% of total operating expenses. Salaries, wages, commissions and benefits came second at 33.6%, followed by rental and leasing costs at 8.1%. The subsector's operating profit margin was 4.1%, up from 3.6% in 2023.
Read those figures carefully, because they're shares of total operating expenses, not shares of revenue. Food cost percentage as most operators calculate it is COGS divided by revenue, which is a different number. Statistics Canada's table 21-10-0171-01 breaks the same data down by segment and by province, which is where to look for a comparison closer to your own operation.
Segment matters more than most operators expect. In 2024, limited-service eating places generated more operating revenue than full-service restaurants for the first time outside the pandemic years, $44.9 billion against $44.2 billion. The two formats carry genuinely different cost structures, so compare your numbers to your own segment rather than an industry-wide average.
Four metrics matter most when you benchmark your own P&L:
Food cost percentage: COGS as a share of revenue. Full-service restaurants typically run higher than quick service restaurants, given more complex menus and higher-cost ingredients.
Labour cost percentage: Full-service operations generally carry a higher labour cost percentage than limited-service or quick service restaurants, reflecting more front-of-house staff.
Prime cost: COGS plus labour, against the 60-65% of revenue target described above.
Operating profit margin: What's left after operating expenses, before interest and taxes.
One caution before you compare anything to a number you read elsewhere: operating profit margin and net profit margin are not the same thing. Operating margin comes before interest and taxes, so your net figure will always sit below it. Compare like with like.
Restaurant income statement vs. P&L: wait, are these the same thing?
Yes. A restaurant income statement and a profit and loss statement are the same document, referred to by two different names.
"Income statement" is the formal accounting term used in official financial reporting. "Profit and loss statement," or P&L, is the term used day to day in restaurant management. Some operators also hear this called an "earnings statement" or "statement of operations", all describing the same report.
Whatever you call it, the document shows revenue, costs, and net profit or loss for a given period. The real value comes from knowing how to read it, which is where we go next.
How to read a restaurant profit and loss analysis
The single most useful habit in reading a P&L is converting every line to a percentage of revenue, not just looking at dollar figures. A $10,000 food cost means very little on its own; it's high at 33% of a $30,000 revenue period, and low at 20% of a $50,000 period.
Here's the process: pull your P&L, convert each major cost line to a percentage of total revenue, and compare each one to the benchmarks above. Flag any line running more than one or two points above target for a closer look.
One move separates a useful restaurant profit and loss analysis from a surface-level glance: trend analysis. Compare this month to last month, and to the same month last year, to catch drift early.
How to build a profit and loss account for your restaurant, step by step
Building a clean P&L, or fixing a messy one, comes down to seven steps.
Set your reporting period. Monthly is the minimum useful cadence for a working P&L. Weekly works better if you're watching labour and food cost closely.
Gather your revenue data. Pull all sales from your POS system, delivery platforms, and any other channel. Break it out by category: dine-in, delivery, pickup, catering.
Calculate COGS. Starting inventory plus purchases minus ending inventory equals cost of goods sold. Run this separately for food and beverage.
Total all labour costs. Wages, employer payroll contributions, employee benefits; every dollar tied to paying your team.
List all operating costs. Rent, utilities, insurance, marketing, platform fees, repairs, and depreciation.
Calculate net profit or loss. Total revenue minus COGS, minus labour, minus operating costs equals net profit or loss.
Convert key lines to percentages. Divide each major cost line by total revenue so you can benchmark it.
The free DoorDash restaurant profit and loss template is a solid starting framework if you're building this from scratch. And since a P&L is one of the core financial documents in any restaurant business plan, getting comfortable with it early pays off well beyond day-to-day management.
The chapter every other P&L guide misses: how delivery fits your numbers
Delivery orders from DoorDash Marketplace show up in the revenue section of your P&L, but the commission fees tied to those orders land in operating costs. If you're not tracking both sides, you can't actually tell whether delivery is profitable for your business.
Here's the idea: your rent and most of your labour are already fixed costs, covered by the business you're already running day to day. When delivery orders come in on top of that, you're not paying for that overhead a second time, so the added revenue often carries a higher incremental margin than it looks like at first glance. A channel that runs at a lower margin than dine-in on paper can still be one of the most profitable parts of your business, especially if your kitchen has capacity it isn't otherwise using.
DoorDash Marketplace's Merchant Portal reporting can help you review order and sales data so you can better analyze delivery performance alongside your other channels.
Repeat orders matter here too. A customer who orders from you a second and third time on Marketplace costs nothing extra to acquire, which is what makes a channel's contribution to your P&L improve over time rather than staying flat.
The P&L toolkit: templates, funding, and tools to move the needle
Once you understand your numbers, three things help you act on them.
Templates. Our free restaurant profit and loss template separates revenue by channel and tracks cost lines as percentages of revenue, not just dollar totals, which is what makes it usable for benchmarking rather than just record-keeping.
Software. Restaurant accounting software, whether general-purpose or restaurant-specific, can automate most of the manual work of compiling a P&L. That's often what makes a weekly review actually practical instead of a monthly chore.
Funding. When your P&L reveals a cash shortfall or an opportunity that requires upfront investment, some restaurants on DoorDash Marketplace may be eligible for a merchant cash advance through DoorDash Capital, in partnership with Parafin. Repayment is a fixed percentage of your DoorDash sales, so payments flex with your business, with no recurring interest and no prepayment penalties. Eligibility is limited to select merchants and requires a sustained sales history with DoorDash. If you qualify, you'll see a pre-approved offer in the Merchant Portal.
Common uses visible directly from a restaurant's P&L include buying inventory ahead of a busy season, covering a short-term labour gap, or funding equipment that reduces COGS over time.
Learn how DoorDash Marketplace can fit into your revenue mix
Your P&L just told you something important: where your revenue is coming from, where your costs are going, and how much room you have to grow.
Here's the thing: most ways to grow revenue come with new fixed costs attached, a bigger dining room, a second lease, more square footage. Adding DoorDash Marketplace as an order channel doesn't carry that same overhead, and the revenue it brings in shows up directly on your P&L.
DoorDash Marketplace can help restaurants reach customers who are already looking for delivery and pickup options, without adding a single table or square foot to your footprint.
You can get started directly through DoorDash Marketplace. If you're already on Marketplace, your next move is in the Merchant Portal: optimizing your menu photos, descriptions, and Promotions to increase what that channel contributes to your bottom line.
