Guide
Monthly management report for a restaurant
A restaurant's monthly management report must show prime cost, food and beverage cost plus labor, as a share of sales, because it is the largest cost a manager controls. Beside it go its two parts, food cost and labor cost, then covers and average check, which explain sales, and cash against the bills already owed. Below: each KPI with its formula, why it matters and where it comes from in Xero or QuickBooks Online, then a worked example.
Updated
What KPIs should a restaurant track monthly?
Prime cost as a share of sales, then its two parts, food and beverage cost and labor cost, each as a share of sales. Add covers and average check, which explain every change in sales, and cash against the bills already owed. Review prime cost weekly when it is moving, and the whole set monthly.
| KPI | Formula | Why it matters | Where it comes from |
|---|---|---|---|
| Prime cost % | Food + beverage + labor ÷ revenue, where food and beverage is the cost of what was used and labor is total labor cost. | Food and labor are the costs a manager can change from week to week, and on a restaurant's margin a small rise in either shows up straight away in profit. | Xero and QuickBooks Online: the Profit and Loss, adding the food and beverage cost of sales accounts to the wage, payroll tax and benefit accounts. Keep those accounts separate in the chart of accounts. |
| Food cost % | Food + beverage cost ÷ revenue, where cost used = opening inventory + purchases − closing inventory. Food and beverage can also each be set against their own sales. | It shows waste, portioning and supplier prices, and tells you whether it was food or labor that moved prime cost. | The cost of sales accounts on the Profit and Loss in either ledger, with a journal for the month-end stock count. |
| Labor % | Wages + benefits ÷ revenue, counting payroll taxes and salaried managers as well as hourly staff. | Labor is scheduled in advance; set against sales, it shows whether the schedule followed the covers. | The wage, payroll tax and benefit accounts on the Profit and Loss in Xero or QuickBooks Online; hours from your payroll or scheduling system. |
| Covers | Guests served in the month. | It separates a change in traffic from a change in what each guest spends. | Your point-of-sale system's sales summary. The ledger holds sales totals, not covers. |
| Average check | Sales ÷ covers, both for the same dates. | With covers, it explains every change in sales: more guests, or each guest spending more. | Sales from the Profit and Loss or the point-of-sale summary; covers from the point-of-sale system. |
| Cash against payables | Cash on hand against supplier bills and other amounts owed. DPO = payables ÷ cost of sales × days in the period. | Guests pay on the day and suppliers are paid later, so cash can look healthy while the bills already owed are nearly as large. | Xero: Balance Sheet and Aged Payables Summary. QuickBooks Online: Balance Sheet and A/P Aging Summary. |
How do I calculate prime cost?
Add the cost of food and beverage used in the month to total labor cost, including wages, salaries, payroll taxes and benefits, then divide by total sales. Food and beverage used is opening inventory plus purchases minus closing inventory, so count the stock at month end; purchases alone can mislead.
- Food and beverage used = opening inventory + purchases − closing inventory, from a stock count on the last day of the month.
- Total labor = wages and salaries, managers included, plus payroll taxes and benefits.
- Prime cost = food and beverage used + total labor.
- Prime cost % = prime cost ÷ total sales × 100.
Report food cost % and labor % beside it, each on the same sales figure, so the report shows which half moved. Whatever you count as labor, count the same items every month.
Why should a restaurant compare cash with payables?
Guests pay on the day, so receivables are small and the bank balance looks healthy, while suppliers, rent and payroll taxes are paid later. A cash balance that barely covers the bills already owed leaves little room for a slow month, a repair or a seasonal dip in covers.
- Put them side by side. Cash at month end, then the payables aging, then payroll and taxes due in the next few weeks.
- Track days payable outstanding. A rising figure can mean suppliers are financing the business, which lasts only until one of them changes its terms.
- Look ahead by week. Covers swing with the season; a 13-week cash flow forecast shows the low point before it arrives.
- Watch the margin below prime cost. Operating margin shows what is left once rent, utilities and the rest of overhead are paid.
What does a restaurant's monthly report look like?
An excerpt from the April 2026 report of Marisol Coastal Group, the hospitality company in the sample. Figures from Ataski's sample company (fictional). The company does not exist; its figures are the sample data of the Financial Analyst's sample workspace, where you can open the hospitality sample.
| Line | Apr 26 | Mar 26 |
|---|---|---|
| Revenue | $942,000 | $852,286 |
| Operating result | $58,000 | $33,282 |
- Prime cost: 62% of sales, from 60%.
- Covers: 21,400 in the month, at an average check of $44.00.
- Operating margin: 6.2%.
- Cash against payables: cash of $318,000 against payables of $320,000; DPO 28 days.
- Not in the sample: the sample reports prime cost as one figure, so food cost % and labor % are not shown separately.
From the sample report's commentary
“Prime cost rose to 62% of sales from 60% — the spring protein contract reset higher and a labour-hours overrun on the two patio openings added ~$19K. On a hospitality margin that 2-point move is most of a slow shoulder-month's profit.”
The note gives the measure, its move, the causes and their cost, the pattern described in the commentary section of the monthly management report template.
What else belongs in a restaurant's monthly report?
These KPIs sit inside an ordinary management report: a short summary, the profit and loss against budget and the prior month with gross margin, the balance sheet, a cash forecast, commentary on what moved and why, and the actions with an owner and a date. The monthly management report template sets out each section, and the month-end close checklist covers what to finish in the books first, the stock count included.
Or have it written for you
Ataski's Financial Analyst writes the monthly management report from your accounting system, with a scorecard, the profit and loss against the prior month, the same month last year and the budget, and a cash and working capital page with days sales and payables outstanding.
- Your ledger. QuickBooks Online and Xero; NetSuite, Sage Intacct, Zoho Books and Business Central in beta.
- Every month on the 1st. The report is refreshed on the 1st of every month for the month just ended, as a draft that waits for your approval.
- History from day one. The first connection reads the trailing 24 months, so the first report already compares each month with the same month last year.
- Cash, 13 weeks out. A weekly cash forecast beside the open invoices and bills falling due.
- A second reviewer. A second, independent AI reviewer reads every monthly narrative, and an AI explanation that cites a source outside your books is discarded, not published.
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Questions
What is the difference between prime cost and cost of goods sold?
Cost of goods sold is the food and beverage used to make what was sold. Prime cost adds total labor cost to it, because food, beverage and labor together are the costs a manager can change from one week to the next.
Are manager salaries part of labor cost?
In prime cost, labor normally means all of it: hourly and salaried staff, managers, payroll taxes and benefits. Whichever items you include, include the same ones every month, so the percentage moves only when the business does.
Why count inventory at month end?
Because food cost is what was used, not what was bought: opening inventory plus purchases minus closing inventory. Without a count, a large delivery on the last day of the month inflates food cost, and an emptied walk-in flatters it.
Where do covers come from?
From the point-of-sale system, not the ledger, which receives only the sales totals. Take covers for the same dates as the profit and loss, so the average check divides sales and covers from the same period.