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There are many aspects to restaurant management that present everyday challenges, but understanding the restaurant P&L makes the job a bit easier. One of the most difficult management responsibilities is balancing the mandate of providing excellent guest service with the requirement of serving a quality product while maintaining bottom line profitability as measured by the P&L. Even though those core objectives seem to be constantly tugging in opposite directions, a great restaurant manager can pull them together and operate a successful organization.
On the financial side of the business, understanding the restaurant P&L, also called an Income Statement, and knowing what the numbers actually mean is absolutely critical. Once the restaurant Income Statement is mastered, managing revenues, expenses and cost controls becomes second nature. Then, when the financial management of the business is solidified, the management team can then focus on other critical elements of restaurant operations such as service and product quality.If you are managing a corporate or chain restaurant, your financial reports are likely in-depth and detailed. They might include projected P&L forecasts, sales log summaries, a balance sheet, an operational budget, tax burden reports, individual unit sales (vs. other location sales), a statement of cash flow, corporate performance reports (shareholder value), controllable costs reports, etc. For smaller operations and independent operators, financial reports are a bit more simple and are basically broken down into three basic categories: Revenue, Expenses and bottom line profit.
