Glossary
Gross profit
Gross profit is total sales minus the cost of goods sold, the dollars left to cover labor, overhead, and profit before those expenses are applied.
How gross profit fits the P&L
Gross profit sits near the top of the profit-and-loss statement: revenue minus the cost of food and beverage sold. It is the pool from which labor, rent, utilities, and everything else is paid, and what remains after those is net profit.
Expressed as a percentage of sales it equals the gross margin, so the two describe the same gap in different units, one in dollars and one in percent.
Example
A restaurant rings $120,000 in a month with $36,000 of food and beverage cost. Gross profit is $84,000, the dollars available before labor and overhead are paid.
See also
Related
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