How To Read Profit And Loss Statement

By | March 15, 2023

How To Read Profit And Loss Statement – In this article, I’ll not only show you how you can learn to read a restaurant’s P&L like a boss, but I’ve also created

Which you will absolutely love and can use for your own bar/restaurant to manage your finances. It has everything you need to track your expenses, including month-to-month and year-to-date, which means it’s a 12-month profit/loss template built in with the formula. And beautiful colors.

How To Read Profit And Loss Statement

How To Read Profit And Loss Statement

Now, for those new to me and bar patrol and my style of work, I am obsessed with systemization. Like seriously obsessed. I systemize everything in my business as well as help other bar and restaurant owners systemize their businesses, but I envision this in other areas of my life as well.

Profit And Loss Definition

“If you mention the word ‘systemize’ one more time in this house,” she told me the other day, “I’m going to kick you in the balls.”

Which is funny, because he’s actually better at it than I am. Systematizing, not kicking people in the balls. Although, in reality, he’s probably on both of my accounts.

Despite my obsession, there’s no denying that having systems in place for your business, from finances to inventory management, to your staff, from marketing to checklists and to-dos, can have big results.

OK, I’ll call it out: Systemization is AMAZING!!! It gives you a clear view of what you do on a daily basis, assigns work responsibilities to everyone, saves hours of your time and keeps your business and life from getting cluttered.

How To Read An Income Statement Of A Company (with Example)

You are here to learn. The truth is, I get enough comments and requests about where to find a good win/loss template that I finally made one myself. Excellent, specially designed for bars and restaurants.

In addition to showing all 12 months of the year in one template, this template also gives you your main expense for the month, something you rarely find on restaurant profit/loss templates, which I don’t fully consider.

If you want to see it for yourself, you can click on the Resources tab above, or you can click here and I’ll take you to the resource page myself. There you will find

How To Read Profit And Loss Statement

Among other things. The pattern is $19.99 because it took me a lot of time and effort to make and I know you might want to work for free, but I’m a selfish capitalist who likes the idea of ​​feeding my kids and buying them shoes. . Trust me though, it’s worth the $20.

How To Read Profit And Loss Statement ?

A profit/loss statement is usually run on a monthly basis, but if you’re one of those mega-on-the-top owner types, you can choose to run it once a week. , or if you are mega. -Lazy-apathetic-and-doesn’t-give-you-business type of owner, you can run it once a year. I don’t recommend it, but it’s your choice.

It’s best to have a weekly profit/loss, but most owners and managers have thousands of chainsaws to juggle, so I recommend monthly as it gives you a good overview of your business. For weekly analysis, we use the Weekly Sales and Basic Expenses report, as well as the Weekly Cash Flow template, which you can also find on the Resources page.

The result of these three will determine whether you have made a profit or a loss and after adding (and subtracting) everything together will appear below. It’s important to understand that these three components tell a story about what’s going on in your business, beyond the numbers shown in the columns and rows.

Hidden in the middle of this statement are the reasons why your profit or loss is what it is, and that’s what you need to analyze.

How To Write A Profit And Loss Statement

So let’s break down the three main components in detail. In the first part we talk about income, or all the money that comes in.

Sales – As I mentioned, this is money coming in. Many places will only have two categories: food and bar, but the more you break them down, the easier it will be to find the problem areas and when you can find them. Problem areas, you can fix them. View our sales range.

In this example, it’s broken down into food and soft drinks, then four categories of bar products, then retail and miscellaneous to cover everything else. It’s your job, so you can break it down however you want, but the more detailed your P/L statement is, the easier it is to compare it to the standards you’ve set to see if you’re meeting those standards. completion or not.

How To Read Profit And Loss Statement

In this example, the current period is February and the year to date represents all the figures for the entire year, which in this case is only worth two months.

How To Get The Profit And Loss Reports?

Where are you getting all these numbers from? From your POS system of course. If you only have one cash register, you likely have limited categories, unless it’s a hell of a cash register. From your POS sales report, you’ll enter the total sales for the month for each category. In this example you can see that the total sales for the month are $101,281 and the year-to-date (YTD) sales are $213,449. The percentage column shows the percentage of total sales for each category (ie 31.7% of their total sales come from food).

Cost of Goods Sold (COGS) – Again, this is the money going out or the money you spend on the products you sell. Yes, these are expenses, but they are separate from the expenses section, which focuses on operating expenses. These are the costs of the products you buy and sell.

As you can see, the COGS categories correspond to the sales categories so we can get cost percentages and compare them to industry standards, which I’ve listed to the right of each category so you can see what they are. Compare in the right place. We should also remember that industry averages can vary depending on the style of restaurant, but this will give you a benchmark to see where your plane is. check it out:

In this figure we can look at both the current month and YTD to see how we compare to the industry average. This is only two months of data (January and February) so YTD is somewhat similar, but let’s take a look.

Reading A Profit & Loss Statement.

The food industry average is 28 – 32%, and based on this report, we are consistently running at 35%. A small stand. We need to either order less, raise our prices, reduce waste, or find new vendors to get better prices. But you can see that the YTD percentage for food is 28.5%, so overall for the two months, we’re doing well. That’s why it’s so important to have a YTD on your P&L, so you can see how you’re doing overall, and not get discouraged by a bad month.

For non-alcoholic, the industry average is 10 – 15%, and our percentage in February was 7.4% and overall it’s 10.2%, so it’s all good there.

You can go right down the list here and see how each category compares to the industry average so you can make adjustments to your product spend, ordering, pricing, and tracking.

How To Read Profit And Loss Statement

Labor Costs – Labor includes money paid to management, hourly wages of employees, and employee benefits. Labor is the first expense we look at on the P/L because now that we have sales and COGS taken care of, once we get into our workforce we can look at our base costs. Yes, it is one of the most important metrics to track. .

Tips For Reading An Income Statement

, which is a shame because all the information is in front of us, so why not calculate it?

What exactly is the main price? In short, it’s the money you spend on your COGS + labor. To get a percentage of your expenses, all you have to do is divide that total by your sales. As you can see in the following example, the industry average for prime cost is around 60 – 65%.

If you look at the green bar, you can see where the main cost is allocated. In this example, the main cost for February is about 70%, which is about 5 – 10% higher than it should be. But again, you’ll notice that YTD headline expense is 63.3%, so we’re doing well in the big picture.

Going back and looking at the labor categories, you can see that again we have benchmarks on the right side so we can compare how we’re doing compared to the industry average for management, hourly staff and employee benefits. All three are within a reasonable range of benchmarks, so we know the paper is fine for now, although we’re always looking to improve it.

How To Read A P&l Statement

Operating Expenses – The last part of the profit/loss statement consists of operating expenses. Here we have both controllable (usually another name for variable costs) and uncontrolled (like fixed costs).

Now, this pattern we’re looking at is called

Signed profit and loss statement, how to read a profit and loss statement in quickbooks, nonprofit profit and loss statement, how to read profit and loss statement for dummies, generic profit and loss statement, llc profit and loss statement, how to prepare profit and loss statement, year to date profit and loss statement, create profit and loss statement, interim profit and loss statement, how to read a profit loss statement, how to read a profit and loss statement pdf