The monthly Profit & Loss (P&L) report is the single page that tells you whether your restaurant actually made money. Many UAE owners receive one from their accountant, glance at the bottom line and file it away. Here is how to read every line and what to do with it.
A sample restaurant P&L
Below is a hypothetical month for a 70-seat casual dining restaurant in Dubai with dine-in and delivery sales. Every line is also shown as a percentage of net sales, because percentages let you compare months, branches and concepts.
| Line | AED | % of sales |
|---|
| Net sales (excluding VAT) | 250,000 | 100.0% |
| Food & beverage cost | (80,000) | 32.0% |
| Gross profit | 170,000 | 68.0% |
| Labour (salaries, accommodation, visas, benefits) | (70,000) | 28.0% |
| Rent & service charges | (30,000) | 12.0% |
| Delivery app commissions | (15,000) | 6.0% |
| Utilities (DEWA, gas, internet) | (9,000) | 3.6% |
| Marketing | (4,000) | 1.6% |
| Repairs & maintenance | (3,500) | 1.4% |
| Admin (licences, software, bank charges) | (6,500) | 2.6% |
| Operating profit (EBITDA) | 32,000 | 12.8% |
| Depreciation of fit-out & equipment | (7,000) | 2.8% |
| Net profit before tax | 25,000 | 10.0% |
Hypothetical example for illustration only.
Line by line
Net sales
Sales should be shown excluding VAT. The 5% VAT you collect belongs to the Federal Tax Authority (FTA); including it inflates revenue and every ratio below it. Discounts and refunds should be deducted, and delivery sales recorded at the gross menu price so that commission appears as a separate cost.
Food & beverage cost
This must be opening stock + purchases − closing stock, not simply what you bought this month. Without a month-end stock count, food cost swings up and down with your purchasing pattern and tells you nothing.
Gross profit
What is left after ingredients. In this example 68% of every dirham is available to pay people, rent and overheads.
Labour
In the UAE, labour is more than salaries: staff accommodation, transport, visa and medical costs and end-of-service provisions all belong here. Leaving them out makes labour look cheaper than it is.
Prime cost
Food cost plus labour is called prime cost. Here it is 80,000 + 70,000 = AED 150,000, or 60% of sales. It is the number most operators watch first, because it is the largest controllable block of cost.
Occupancy and other operating costs
Rent is largely fixed, so its percentage falls as sales rise. Delivery commissions, by contrast, rise with every delivery order and deserve their own line rather than being netted off sales.
Operating profit and net profit
Operating profit shows how the restaurant performs before the cost of its fit-out. Depreciation spreads that investment over its useful life. Net profit before tax is the figure shared among partners and the starting point for UAE Corporate Tax, which applies at 9% on annual taxable income above AED 375,000 (for financial years starting on or after 1 June 2023). Taxable income can differ from accounting profit, so confirm the calculation with your tax adviser.
Rules of thumb, not rules
Every concept is different, but many operators use these ranges as a starting point for discussion:
- Food & beverage cost around 28–35% of sales.
- Labour around 25–30%.
- Prime cost at or below roughly 60–65%.
- Rent ideally kept to about 10–12% or less.
A specialty coffee shop, a fine-dining restaurant and a cloud kitchen will each sit differently. Your own trend matters more than any generic benchmark.
How to act on your P&L
- Compare three columns: this month, last month and the same month last year (or budget).
- Investigate any line that moves by more than one or two percentage points. Food cost from 32% to 35% on AED 250,000 of sales is AED 7,500 of profit gone.
- Ask why, line by line, before cutting anything: supplier price, portion size, overtime or a sales mix change.
- Get it on time. A P&L delivered three months late is history, not management.
Key takeaways
- Always read the P&L as percentages of net sales, excluding VAT.
- Food cost needs a month-end stock count: opening stock + purchases − closing stock.
- Prime cost (food + labour) is the biggest controllable block of cost.
- Show delivery commission and full UAE labour costs as separate, complete lines.
- Compare month on month and investigate any line that moves by more than a point or two.
Frequently asked questions
Should restaurant sales on the P&L include VAT?
No. Output VAT at 5% is collected on behalf of the Federal Tax Authority and is a liability, not revenue. Sales on the P&L should be net of VAT, discounts and refunds.
Why is my bank balance different from my net profit?
Profit is measured on an accrual basis: it includes unpaid supplier invoices, depreciation and stock movements, while the bank only shows cash in and out. Loan repayments, partner drawings and VAT payments also move cash without touching profit.
What is prime cost in a restaurant?
Prime cost is food and beverage cost plus total labour cost. It is usually the largest controllable cost block, so many operators review it every month as a percentage of net sales.
This article is general guidance for UAE F&B owners, not tax or legal advice. All figures are hypothetical examples.
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