The five restaurant KPIs your P&L should show you every month
Prime cost, sales per labor hour, cost of goods by category, covers per shift, and cash conversion.
A restaurant P&L that only shows sales, expenses and a bottom line is a history lesson. Five numbers, tracked monthly and compared to the month before, turn the same statement into something you can act on.
01 · Prime cost
Cost of goods plus total labor, as a percentage of sales. It is the fastest read on whether the operation is fundamentally sound, because it captures the two costs you control weekly. Most full-service concepts want prime cost in the low-to-mid 60s; drift above 70% and rent, utilities and debt service have nowhere to live. Track it monthly, and weekly if you can — by the time a quarterly statement shows a problem, you have paid for it three times.
02 · Sales per labor hour
Net sales divided by hours worked, broken out by daypart. Labor percentage tells you what happened; sales per labor hour tells you whether the schedule matched the volume. A restaurant with healthy overall labor can still be badly overstaffed at lunch and understaffed at 7:30 — this is the number that exposes it.
03 · Cost of goods by category
One blended food cost number hides everything. Split cost of goods into protein, produce, dairy, dry goods, non-alcoholic beverage, beer, wine and spirits, and each line becomes diagnosable: a protein line that jumped two points is a spec, portion or price problem you can find in an afternoon. Beverage categories deserve special attention — pour cost above the mid-20s on spirits is usually free-pouring, not purchasing.
04 · Covers and average check
Sales alone cannot tell you whether a good month came from more guests or higher prices — and the two require completely different responses. Track covers by daypart alongside average check per cover. Rising check with falling covers is a warning that regulars are thinning out; rising covers with a flat check usually means an upsell and menu-mix opportunity is sitting untouched.
05 · Cash conversion
Profit is an opinion until it clears the bank. Watch the gap between reported profit and cash movement, and the three things that create it: payables timing, inventory sitting on shelves, and liabilities you collected but do not own yet — sales tax, tips payable, gift card balances. Restaurants rarely fail because of a bad P&L; they fail because a profitable month did not produce cash when a payment came due.
Make the reporting boring
These five numbers belong on one page, in the same format, in the same week of every month, next to last month and the same month last year. Consistency is what makes a trend visible. Our managed accounting clients get exactly that page with CPA-reviewed statements behind it — and the CFO advisory engagements turn it into forecasts and expansion models.