What Is a Restaurant Income Statement?

A restaurant income statement is a financial document that details the income or revenue streams of a restaurant establishment or food business. In addition to revenue, most restaurant income statements also include the restaurant’s expenditures, sales, etc. 

According to an article by The Balance Small Business, food and labor are two of the biggest expenses for a restaurant. Further, restaurant expenses can also be classified into two. There are fixed expenses such as salaries, rent or mortgage. Then there are also fluctuating costs that include food prices and monthly utilities. 

Sources of Restaurant Income

A restaurant business can be both a fulfilling and challenging venture to get into. You do not even necessarily have to be a chef or be considered a ‘foodie’ to thrive in this business. The food industry is still a business, and those blessed with a keen business acumen and talent can absolutely succeed in the restaurant business. The following examples describe some major sources of a restaurant’s income. 

Service. A restaurant is essentially service-oriented. It can be classified under the services sector. In other words, restaurants mainly provide food and drinks to customers for them to consume. Food can be served in a variety of ways too. Dine-in, take-away and delivery services are the most basic forms of restaurant service. A company can also operate several chains or branches of the same restaurant. While others diversify and run more than one type of restaurant or brand. Service is the main source of income for many restaurants. Whether it is a fast-food chain or a fine dining hall, as long as the customers keep coming and consuming, it can provide a steady stream of income. However, some food companies do not only rely on the restaurant’s performance and service sales. They look for other sources of revenue in order to augment their income. Retail. Another way a restaurant can earn is by selling merchandise or products. This is quite common among restaurateurs. Especially if a company is struggling with its restaurant’s sales performance, some may find the need to look for other ways to earn profit. Offering retail products can give customers and clients a chance to take something home with them. You could even market retail items as gifts or souvenirs for customers to give to loved ones. You can dedicate a space or even just a couple of shelves in your restaurant to display goods and products. Having a retail section is not always a guarantee that it will succeed, but it can bring additional sales if you advertise and promote it the right way. The production and procurement of these retail products will obviously cost you; but if you have a good sales and marketing strategy, you could see a potential increase in profit. Franchise. Another lucrative source of income for a restaurant or food business is franchising. Especially if you have successfully grown and expanded your business, you might want to consider accepting franchise offers. There can be a lot of issues dealing with franchisees; but as long as there is a mutually beneficial arrangement and a clear agreement of terms, you can earn a substantial income without even doing any work. As the master franchisor, you usually get a cut of the profit earned by franchisees. The more franchises you oversee, the more revenue flows in. Of course, this is a question of affordability and feasibility. If you have the means to open up several franchises or grant the license to interested parties, it can be a very profitable business move. Catering and Events. In addition to merely in-store sales from serving food to customers, another option for added income is by venturing outside the establishment’s premises. Why not take your food business and service elsewhere? Establishing a catering arm can be a lucrative venture as well. Obviously, you need to run the numbers and weigh the pros and cons to determine if it is viable enough. With catering and events, you are opening up an entirely new market and presenting yourself to a lot of prospective opportunities. The catering industry can be a highly profitable business if you possess the right strategies and business attitude. Loyal customers who regularly visit your restaurant would now have the opportunity to enjoy your food and service outside as well.

Cost-effective Tips for Restaurants

Running a food business or restaurant is not a walk in the park. There are many variables and factors that can contribute to a restaurant’s sales or performance. For many restaurateurs, swelling costs may mean a matter of survival for their business. The following are some cost-effective tips that can help ease restaurant expenses in the long run. 

Conserve water. It may sound simple and straightforward, but restaurants use gallons of water each day. The bigger the floor size of the restaurant or the more staff there are working at any given time, it is likely that more water is used to keep up with daily demands. Restaurants should not just conserve water to save on utility bills, but so they can actively contribute to environmental preservation as well. Washing dishes and cleaning up typically require the most water. In order to conserve water, one way is by soaking dishes instead of letting the faucet run constantly while washing. It is simply a matter of being more mindful of how much water you consume in your daily restaurant and kitchen activities. Water is an all-important and finite resource that people cannot afford to waste. Train staff well. Restaurant owners and operators know full well that human resource and manpower are essential to their business. Apart from wages and employee benefits, you also spend money on various training costs. Just training a new hire can cost a considerable amount. Food industry workers need to be well-versed in a number of different areas including customer service, culinary skills and food safety. You need to be able to train staff well for them to do a good job. This applies to both front of the house and back of the house employees. The latter work in the kitchen while the former take care of the dining and service areas. Well-trained staff and reliable employees can help boost the establishment’s performance and that can translate into better sales in the long run. But if an employee is uncommitted or departs only after a few weeks or months, that is wasted investment and expense right there. Keep a religious inventory of ingredients. A restaurant business requires keen monitoring of kitchen supplies, equipment and ingredients. There is a lot to keep track of not only in the kitchen but in all areas of the restaurant. Since food is perishable, it has a shelf life. All the raw ingredients needed in cooking should, therefore, be constantly checked for freshness and quality. The last thing you want is to end up wasting food or throwing away unused ingredients. You spend money to acquire and purchase ingredients so you want to make sure it is not wasted. Keeping an organized and comprehensive inventory of all your kitchen supplies and materials can help ensure that nothing goes to waste. Make sure to keep track of the expiry dates on food items so you can use them accordingly. Take advantage of social media. Cut costs by using social media for all your promotional and marketing needs. These days, you do not necessarily have to hand out flyers or put up posters of your restaurant unlike decades ago where above-the-line marketing options were all there is. Today, social media is a fast, convenient and cheaper way of addressing all your marketing needs. Creating a social media account is free; however, it comes with additional expense for optional boosted or targeted marketing. Still, going digital instead of using traditional marketing tactics is becoming more practical nowadays. Many restaurants still prefer to use both types of marketing, it really depends on individual needs and preferences. For instance, you can still have your restaurant featured in magazines or newspapers while also constantly updating your social media pages.

How to Create a Restaurant Income Statement

To create a restaurant income statement, you have to prepare all the relevant data. You can browse the selection of sample income statements above if you need help. Simply choose one that best suits your needs then follow the basic steps below. 

Step 1: Basic Restaurant Information

The first step is providing the basic details. Before you start inputting the values or numbers, you must first cover some basic restaurant information. Make sure to state the name, address, key person or persons, and contact information of the business. Since it is a formal financial document, you can also include your company logo. Refer to the sample templates above for more ideas. This section should be plain and straightforward. Avoid including unnecessary or irrelevant information.  

Step 2: Statement of Income

Once you have covered the basics, the next step is enumerating the restaurant business’ sources of income. As discussed earlier, a restaurant can have multiple streams of revenue. It can come in various forms too. Be sure to list all that apply under your income statement. It is best to always be transparent. You want to present accurate and precise financial data that is truly reflective of your company’s performance. Your income or revenue can give you a clearer picture of how well your restaurant is doing or if it’s not doing well at all. Knowing and monitoring your income statement can also shape your financial decisions and next steps.  

Step 3: Breakdown of Expenses   

With income always comes expenses as well. After listing all your income sources, you can then proceed to the breakdown of restaurant expenses. The content of this section will depend, of course, on each restaurant. But there are several common and universal expenditures that many restaurants must deal with. There are operating and overhead costs that are needed to keep the restaurant running. These operating expenses include rent, utilities, and employee salaries and benefits. These are usually fixed and essential. In addition to overhead costs, restaurants and establishments also need to invest in marketing and pay their suppliers on a regular basis. All these types of expenditures must be enumerated and identified one by one.   

Step 4: Next Steps

Lastly, it is not enough to merely identify your restaurant’s income and expenses. The work should not just end there. You need to be able to make sense of the amounts or values that were inputted. This section is dedicated to evaluating your statement and planning your next steps. What can be deduced from the numbers or figures in your spreadsheet? What is the bigger picture based on your overall assessment? And lastly, what should be done in order to address losses and other areas of improvement? These are the types of questions that you should ask in order for your income statement to mean something. 


What is a restaurant income statement?

A restaurant income statement is a financial document or spreadsheet that details a restaurant establishment’s earnings and expenditures.

What is a restaurant P&L statement?

A restaurant P&L or Profit and Loss statement is a financial document that presents the restaurant business’ revenue and expenses within a fiscal year or any given time period.

What are restaurant operating expenses?

Some common restaurant operating expenses include labor costs, utility bills, occupancy or rent expenses, kitchen equipment, and advertising costs.

An income statement is a fundamental financial document that’s needed for anyone involved in the food and restaurant business. It is a tool that’s supposed to help the restaurant understand its performance and enable management to make sound financial decisions. Browse the sample templates available above to start customizing your own income statement now!