How to Understand Restaurant PL Like a Chef

salmon plate| Culinary Business Strategy Blog
photo credit: thornsa

By Deagon B Williams

In my experience as a classically trained chef, the phrase Restaurant P&L or Profit and Loss Statement made my eyes roll in the back of my head and my heart palpitate. It was a long time before I could calmly appreciate the importance and power of any financial statement, including a PL or P&L for restaurants. You see, the beauty of financial statements is that they offer an overview of the financial health and well-being of a food business- all by laying out the relationships between certain key indicators.

As soon as I understood that reading a financial statement was about all about looking at the relationships between the numbers, it was suddenly in a realm that my brain could understand because it was just like cooking. I understand cooking to be about relationships- sweet, salty, acid and bitter all interplay with one another to make a stunning flavor. Just like there is an ideal relationship of sweet to salty for a certain type of dish, there is an ideal relationship of figures on your financial statements for certain types of business goals.

Out of all the financial statements, a profit and loss statement is most like the tasting of a complex dish in mid preparation.  A P&L statement is also known as an income statement. This report shows us the big picture bottom line any given period of time- like a snapshot. Money comes in and out and leaves us often wondering if the financial well-being of our business is in good shape or not. And this is exactly the beauty and power of a restaurant PL or P&L statement- it lets us know really truly where we are in relation to financial success.  Even more importantly it helps us to better understand where our money is going and offers us the ability to adjust accordingly before the end of the year or before real problems hit (just like a taste test of the soup tells us if we need more salt).

So, hit the ‘generate report’ button and take a look at what comes out. With time and patience it will begin to not only make sense but also be your friend. Have questions about how to implement the necessary changes? Email us at, we’ll be happy to consult with you.

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