How to Calculate a Restaurant's Profit

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Restaurants need to calculate and determine profitability just like any other business. Owners may desire to calculate restaurant profits weekly or monthly, depending on their preference. One necessary part of this process is accounting for food costs. This is often the second-largest expense for a restaurant, behind payroll. A few basic accounting steps can help owners calculate profit. Most restaurants use an automated cash register system from which they can extract information for this process.

Run a sales report from the cash register system. This shows all sales for individual food items, with a total at the end of the report.

Add the portion of customer tips retained for the restaurant to the figure in Step 1.

Run a cost report from the cash register system. The cost for each food item sold is on the report, along with the total cost for the current period.

Subtract the total cost from the total revenue for the restaurant. This represents the restaurant’s gross profit for the current period.

Input all operational expenses into a spreadsheet. Only include expenses for the current period.

Subtract the figure in Step 5 from the figure in Step 4. This represents the net profit for the restaurant’s current period.

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