How Do I Work Out The GP For My Restaurant's Kitchen?

The gross profit or GP for your restaurant can be calculated using your total sales for the restaurant as well as all of your expenses.

You can get the gross profit of the entire restaurant or just for the kitchen. It should be broken down by food cost, labor cost and then additional costs, including electric and such.

Your food cost will be your starting inventory dollar amount plus any purchases you made. You’ll then subtract your ending inventory from that and that will be your usage. Divide that by your sales for the period and you’ll have food cost as a percentage. If you don’t inventory your product, then you’ll simply use your purchases. So if you purchased $1000 in product and your sales were $5000, your food cost is 20%.

The same can be done for labor. All labor, whether you count front of house (servers, bartenders, hosts) and kitchen staff (prep, cooks, dishwasher) together or separately, you’ll add up what you paid each one of them and get a total. That total will be divided into your sales to give you a percentage.

With all of your other costs, the same thing goes. Electrical, water, disposables (plates, napkins and so on) will all be added together and divided by your sales for the final percentage.

You’ll then be able to see what your total GP is as well as a breakdown of what you’re spending the most money on. You will be able to see where you can manipulate your numbers to make more profit, whether it’s in labor, food, or miscellaneous areas. You’ll want to calculate this monthly so that you can make changes before it’s too late to change the way you are doing business and shutting the doors because you’re not turning a profit.

GP is gross profit and is usually expressed as a percentage.  For a bar or restaurant typically the GP is around 70%.  This is the amount required to cover all the overheads such as staffing, fuel costs, rent, insurance etc.  You can calculate your actual GP for each item by:
1. Dividing the selling price by 1.175 (to remove the VAT - in the UK VAT is 17.5%)
2. Divide the cost to you of the ingredients by the figure in 1.
3. Multiply the answer to 2 by 100.
4. Subtract the answer to 3 from100 to get the percentage GP.

As a formula GP (%) = 100% - (Cost of the ingredients x 100% x 1.175 / Selling price)

If you are not in the UK then you will have to adjust the VAT element accordingly.

For working out the Gross Profit of your restaurant, you need to deduct the "Cost of goods sold" from the revenue which are the sales the business has made. The cost of goods sold include the cost of all the things that were included in your products for sale, in your case the prices of groceries, etc that were used to make meals and satisfy the customers. It would not include the expenses for example salaries and wages to employees or electricity bills. These will be included only if the net profit is to be calculated.