How to Make Your Profit-&-Loss Statement One of Your Most Valuable Tools

Creating and maintaining a profitable restaurant depends on successful decision-making and management of several key areas.

The most commonly cited areas have to do with service, food, concept, location and cleanliness. While managing these issues is important, even crucial to the success of most operations, so is paying attention to and managing the numbers or the financial side of the restaurant.

Restaurants don't go out of business because they have slow service, a poor location or even mediocre food. Restaurants go out of business because they fail to make a profit. Being on a busy street and having great food and attentive service helps, no question; but everyone knows restaurants lacking in these areas have managed to make money and stay in business for years. Conversely, there have been scores of restaurants with more than adequate food and service, and even a prime location, that are long gone.

There is one common characteristic that I have noticed from working with literally hundreds of independent restaurant operators over the past two decades. The really good ones, those who manage to be successful year after year, are not only adept at creating high standards of service and food quality in their restaurants, they also understand and pay close attention to the financial side of their business..

. . . your P&L should be able to tell you where your operational challenges are and where you need to focus your attention. -- Jim Laube

These financially astute operators know that every decision and activity that takes place on the operational side of their restaurant is eventually reflected in their numbers and the one report that is most indicative of how well (or how bad) their restaurant is being managed is their profit-and-loss statement (P&L).