Monthly P&L review for a café: the lines to read and the questions to ask

Your accountant sends the profit and loss statement for last month. It's two pages of numbers, the bottom line is a little lower than you hoped, and it's not obvious why. So it gets filed, and next month the same thing happens.

A P&L is only useful if you read it the same way every month and ask the same questions. This post is that routine: how to lay the P&L out so it reads like a café, which lines to look at first, what to ask when a line moves, and a worked example. Our bookkeeping setup post has the chart of accounts behind it; this is what you do with the statement once the month is closed.

This is general information, not tax or accounting advice. Your accountant should set up the statement and decide how items are categorized. All figures below are hypothetical.

Lay it out around prime cost

Ask your accountant to group the P&L like this. Every line also gets a % of net sales column, because dollars rise and fall with sales and percentages tell you whether you're running the place differently.

1. Sales, by type (beverage, food, retail, catering), then discounts and comps, then net sales.
2. Cost of goods sold, by the same types, plus packaging.
3. Labor: hourly wages, salaries, payroll taxes, benefits and workers' comp.
4. Prime cost = COGS + labor. The two biggest costs, together. Our prime cost guide explains it.
5. Operating expenses: occupancy, utilities, card fees, delivery commissions, repairs, supplies, marketing, software, insurance, professional fees.
6. Operating profit, then interest and depreciation, then net profit before tax.

The worked example

A hypothetical café, one month:

And the comparison that makes it useful:

Sales grew, labor and fixed costs were spread over more sales, and profit went up, but less than it could have: COGS rose 1.1 points. That's the line to dig into this month.

The review sheet

Fill this in each month. Compare with last month, with the same month last year once you have one, and with your own target.

Month ________ Reviewed by ________ Date ________

Three actions for next month:

1. ________________________________ Owner ________
2. ________________________________ Owner ________
3. ________________________________ Owner ________

Set your targets from your own first few months and your break-even math, not from someone else's café.

The questions to ask, line by line

Sales

• Up or down, and why? Weather, a holiday, a closed day, a catering order, a price change. Write the reason next to the number.
• The mix: did food grow faster than beverage? If your food runs at a higher cost % than your drinks (your plate costs will tell you), a shift in the mix moves COGS % even if nothing else changed.
• Discounts and comps: who gave them and for what? A rising comp line is often a training or quality problem, not a marketing one.

Cost of goods sold

COGS for a month is opening inventory + purchases − closing inventory. If one of the three is off, COGS is off.

• Was the count right? A rushed or skipped end-of-month count moves COGS more than any price change. Our inventory count sheet makes the counts consistent.
• Invoice timing: did a big order arrive on the 30th and get counted as a purchase but not on the shelf? Or the other way round?
• Prices: which items went up? Check the invoices for your top ten items by spend.
• Waste: what does the waste log say for the month?
• Portions and recipes: if prices and counts are right, compare what you used with what your recipes say you should have used. The gap is over-portioning, waste nobody logged, or theft.

Labor

• Hours or rate? Labor % moves when hours go up, when wages go up, or when sales go down. Split them. Our labor cost % guide has the weekly version.
• Overtime: how much, who, and was it planned?
• Payroll timing: a month with three pay dates instead of two can make labor look high on a cash-basis P&L. Ask your accountant whether wages are booked when earned or when paid.

Operating expenses

• Card fees rise with card sales. If they rose faster than sales, look at your statement's effective rate. See card processing fees.
• Delivery commissions: are the apps' sales worth what they cost? Our delivery apps cost guide shows the math.
• Repairs: a one-off, or the same machine again? Check the equipment maintenance log.
• Subscriptions: anything you're paying for and no longer use?

The bottom

• Operating profit vs cash: profit isn't cash. Loan principal, equipment purchases and owner draws don't show on the P&L but come out of the bank. Keep the 13-week cash flow forecast next to it.

The one-hour routine

Where Mays fits

Mays isn't accounting software: it doesn't keep your rent, utilities or other expenses, and it doesn't produce a P&L. It keeps several of the inputs, by month:

• Prime Cost (Insights → Prime Cost, for admins): Revenue from Square or Union POS, Labor Cost, Theoretical COGS from your recipes and mapped sales, and Invoice Spend from posted invoices, with Labor %, Food % and Prime Cost %, grouped by Day, Week or Month. See Prime cost.
• What you bought (Insights → Vendor Spend): posted invoices By Vendor or By Category, by week, month or quarter, for the "prices" question. See Vendor spend.
• Hours and overtime (Insights → Labor Cost and Scheduling → Reports): scheduled against worked hours, and Actuals per day with Export CSV.
• Every invoice under Inventory → Invoices, with the document attached, for the "invoice timing" question. See Vendor invoices.

Two things to know so the numbers match your P&L. Mays's labor cost is wages only: payroll taxes and benefits aren't included, so it will be lower than the labor line on your statement. And its food cost is theoretical: what your recipes say your sales used. Your P&L's COGS is actual, so the gap between the two is the waste, portioning and theft question above.

Read it the same way every month

Lay the P&L out around prime cost, put a % next to every line, ask the same questions when a line moves, and leave the hour with three actions. After a few months, the P&L stops being a surprise.

Start your free trial: 30 days, every module, no card needed. Or book a walkthrough and we'll set up your prime cost view with you.